Which Do You Choose Technical or Fundamental Analysis?
In forex trading or foreign currency transactions, predictions are required before placing a sell or buy position. Forex analysis is an attempt by a forex trader to be able to know the conditions of the forex market and predict the direction of future price movements. Without this method, traders can find it difficult to read profit opportunities and even losses that will be faced. Therefore, every trader needs the right forex analysis techniques so that it is easy to read market movements while increasing profit opportunities. In general, there are 2 types of analysis, namely technical analysis and fundamental analysis.
Technical Analysis
Technical analysis is considered to have more tools than fundamental analysis. However, because it is quite difficult to use, it requires a deep understanding to be able to use it properly.
This type of forex analysis is used as an analytical method that is able to predict the direction of future price movements by studying market price data in the previous period that has formed a chart. This type of analysis focuses more on the charts and indicators available on the trading platform. Technical analysis includes the forms of price movement patterns to determine the high probability of entry and exit. The existence of current interpretations and applications has made it easier for traders for technical analysis. Traders can also know and study the character of price movements so that it is easier to find opportunities in the current price movement.
Fundamental Analysis
In this type of analysis, traders seek to examine economic factors that are indicators of a country's economic health and their impact on the forex market. The focus of fundamental analysis in the forex market is central bank interest rates. However, some other important data that can be observed in fundamental analysis are employment (number of jobs, unemployment, salary growth), inflation, industrial production, manufacturing business climate, GDP, and so on.
Through this analysis, traders can capture opportunities that may arise in a released data so that they can then determine strategic steps and have good considerations before entering the market. In addition, traders can also understand the global trend of a particular currency and its relation to the dynamics of a country's economy.
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