WHY do we need Technical and Fundamental Analysis for Forex Trading?

Fundamental analysis is a method of evaluating a security in an attempt to assess its intrinsic value, by examining related economic, financial, and other qualitative and quantitative factors. Fundamental analysis is a way of looking at the forex market by analyzing economic, social, and political forces that may affect the supply and demand of an asset. The idea behind fundamental analysis is that if a country’s current or future economic outlook is good or bad will reflect their currency should strengthen or weaken. The good country’s economy is, the more foreign businesses and investors will invest in that country.

Some Important Fundamental Events

FED /ECB / BOE/ BOJ –> BANK Interest Rate Decision

Major Political Events / Country’s Important Decision –>Brexit Exit

Nonfarm Payrolls / Employment and un-employment claims

Retail Sales / Production / Manufacture Results

EIA Crude Oil Stocks change/ API Weekly Crude Oil Stock

Consumer Price Index / Producer Price Index

ECB President Speech

FOMC Minutes

Higher interest rates make dollar-denominated financial assets more attractive. In order to get their hands on these lovely assets, traders and investors have to buy some greenbacks first. As a result, the value of the dollar will likely increase.

The fundamental approach is often used by long-term investors, but it can also be combined with technical analysis to help traders gain insight into the overall state of the market and the attractiveness of a particular security.

Since the forex market is a 24-hour market, there tends to be a large amount of data that can be used to gauge future price activity, thereby increasing the statistical significance of the forecast. This makes it the perfect market for traders that use technical tools, such as trends, charts and indicators.

The purpose of Technical Analysis is to help the investor make a more financially sound investment decision. The price is the key to success in stock market investment. The supply and demand of stocks all depend upon technical analysis.

Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock. But Technical analysts do not attempt to measure a security’s intrinsic value, but instead use stock charts to identify patterns and trends that suggest what a stock will do in the future.

Technical indicators are mathematical calculations based on the price, volume, or open interest of a security or contract. By analyzing historical data, technical analysts use indicators to predict future price movements. Technical Indicators represent a statistical approach to technical analysis as opposed to a subjective approach. By looking at money flow, trends, volatility, and momentum, they provide a secondary measure to actual price movements and help traders confirm the quality of chart patterns or form their own buy or sell signals.

Some of the Technical Indicators

Moving average

Relative Strength Index (RSI)


Bollinger Bands

As conclusion both analysis required for trader/Investor to build their trading/Investment skills.



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This Post Has 2 Comments

  1. ninja

    Thanks for nice information.

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