Technical or fundamental analysis? It will depend on your goals and how you approach the markets. A small article that puts things in place and that clearly takes the bias of technical analysis. You can find the original article on xe.com.
Choose your approach
There are two main approaches to analyze the forex market. It is important to understand how to use them effectively.
Technical analysis focuses on the study of price movements using historical data in order to predict future price developments. It is considered that all available information on the state of the market is already included in the prices of all currencies, and that the only thing left to do is to study price movements in order to make the appropriate decisions to trade. With the perfect CM Trading options you can find the smartest options now.
The first tool in technical analysis is the graph. Charts are used to identify trends and chartist figures that help seize winning opportunities. Followers of this type of analysis seek trends in the forex market and believe that the key to success is to identify these trends at an early stage of their development.
Fundamental analysis focuses on the economic, social and political elements that govern supply and demand. Its basic premise is that macroeconomic indicators such as growth rate, interest rate, inflation and unemployment rate can be used to take a position in the market. Information on economic data can be obtained through economic calendars or by following websites that publish the latest market news.
There are several ways to understand fundamental analysis. Each trader will look at a different indicator and will not give the same importance to each information.
What should we use: Technical or Fundamental Analysis?
Traders who use technical analysis use charts and trends, they usually follow many pairs at a time. Traders who use fundamental analysis have to sort through market information and follow only a few pairs. This is why many traders prefer technical analysis.
Some also choose this trading method because the forex market allows them to identify very marked trends in pairs. They therefore seek to master technical analysis to trade on many currency pairs or commodities.