Fundamental Analysis vs. Technical Analysis in Forex
How to Use Both Fundamental and Technical Analysis in Foreign Exchange Trading?
Which kind of analysis is preferable for a trader is a topic of intense discussion. Which kind of trader is preferable, fundamental or technical? This essay will examine the distinctions between these two categories of traders and the sorts of data that forex traders, in particular, like.
Comparison between technical and fundamental analyses
| TECHNICAL ANALYSIS | FUNDAMENTAL ANALYSIS | |
|---|---|---|
| Definition | Forecast price movements using chart patterns | Various economic data used to establish value/ target price |
| Data considered | Price action (charts) | Inflation, GDP, interest rates etc |
| Time horizon | Short, medium and long term | Medium and long term |
| Skillset required | Chart analysis | Economics & statistical analysis |
FUNDAMENTAL ANALYSIS
Fundamental analysis entails evaluating a nation’s economy and its currency. It does not account for changes in currency rates. Fundamental forex traders will instead utilize data points to assess a currency’s strength.
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