
Which Type of Analysis for Forex Trading is Best?
Whereas technical analysis (TA) involves poring over charts to identify patterns or trends, fundamental analysis (FA) involves poring over economic data reports and news headlines.
Fortunately, the different types of market analysis complement each other. Even hardcore technical traders may find useful fundamental nuggets that can help with their technical analysis. And vice versa. In real-world markets, prices are constantly changing, and usually develop trends. Those changes in prices can and do affect fundamentals. This means that trends in prices affect fundamentals just as fundamentals affect prices.
✅To recap, technical analysis is the study of currency price movement on the charts while fundamental analysis takes a look at how the country’s economy is doing. Market sentiment analysis determines whether the market is bullish or bearish on the current or future fundamental outlook. Fundamental factors shape sentiment, while technical analysis helps us visualize that sentiment and apply a framework to create our trade plans.