Based on how people feel, the market tends to react. People’s feelings may be based on their response to economic reports, or based on an assessment of current market conditions.
Choose fundamental analysis or technical analysis for foreign exchange transactions? -Yuhui International
You should have guessed that there are hundreds of millions of people in this world, and they all have different feelings and opinions.
You are probably thinking, “God, there are so many uncertainties in fundamental analysis!”
Yes, your idea is actually very correct.
It is impossible for us to judge 100% of the future trend of the exchange rate based solely on the quality of fundamental economic indicators.
This is not to say that fundamental analysis should be abandoned.
Due to the large amount of fundamental data available for analysis, it is impossible for most people to analyze all these data together.
They may be quite familiar with an economic report, but on this basis they still cannot fully understand the overall picture of the economy.
At the same time, since most fundamental data only refer to a currency country or an economy, and data for currency analysis of other countries or economies are also needed, only in this way, the analysis of currency pairs is more comprehensive.
As we mentioned before, currency pair analysis is a comprehensive analysis of a strong currency and a weak currency.
From this point, you are likely to ask “Do I need to perform fundamental analysis to make myself a successful trader?”
We fully know that both the fundamental analysis clusters and the technical analysis clusters exist in reality.
Technical analysis seems to be more useful for short-term investors, because price volatility is their focus.
Mid-line or some long-term traders will also pay attention to fundamental analysis, because fundamental analysis can provide information about currency value. Now, we are going crazy, because we want to tell you that you should use both fundamental analysis and technical analysis.
When a key fundamental event occurs, technical analysis strategies may not be useful; and when a price pattern is formed in the short term, or the exchange rate touches a key price level, pure fundamental analysis traders may miss the opportunity.
Fundamental and technical analysis will take into account both. You can keep an eye on upcoming economic data or events, and you can also use different technical analysis tools to guide your transactions.
In this lesson, we will discuss the main fundamental factors that affect the movement of currency pairs. They include: interest rates, monetary policy, and economic data.