Introduction: Two Schools of Analysis
Every trader faces the question: should I focus on technical analysis or fundamental analysis? Both approaches offer unique insights into the market. Understanding their strengths and weaknesses—and how to use them together—can give you an edge.
"Technical analysis tells you when to trade; fundamental analysis tells you what to trade."
What is Technical Analysis?
- Focuses on price charts, patterns, and indicators
- Assumes all information is reflected in price
- Used for timing entries and exits
What is Fundamental Analysis?
- Focuses on economic data, news, and events
- Looks at interest rates, GDP, inflation, and company earnings
- Used to determine long-term value and market direction
Table: Technical vs Fundamental Analysis
| Aspect | Technical | Fundamental |
|---|---|---|
| Focus | Charts, price, indicators | News, data, events |
| Timeframe | Short to medium | Medium to long |
| Strength | Timing trades | Understanding big moves |
| Weakness | Can miss news-driven spikes | May lag in timing |
How to Combine Both Approaches
- Use fundamentals to choose what to trade (e.g., strong economy, trending news)
- Use technicals to time your entries and exits
- Be aware of major news events that can override technical setups
"The best traders respect both the chart and the calendar."
Common Mistakes
- Ignoring fundamentals and getting caught by surprise news
- Relying only on news and missing technical reversal signals
- Overcomplicating analysis—keep it simple
Conclusion
Technical and fundamental analysis are both valuable tools. Use them together for a well-rounded approach—let the fundamentals guide your focus, and the technicals guide your timing.
👉 Check the economic calendar before trading, and always confirm your setups on the chart.
