Forex is a way to analyze the movement of the national currency with the help of economic data. There are several types of market analysis – fundamental analysis, technical analysis, wave analysis, and others. In this article, we will tell you only about the first two analyses: fundamental analysis and technical analysis. Some people believe that they are the basic types of analysis of market trends.
Many people constantly debate which of these two analyses are better, but to tell you the truth, you need to know a bit about both. So, let’s look at each analysis separately.
Fundamental analysis
Fundamental analysis is a method of forecasting price changes based on analysis of current economic conditions. In other words, you see, whose economy is growing, and whose economy is falling. The idea behind this type of analysis is that, if the economy grows, the national currency will also rise.
Technical Analysis
Technical Analysis forecasts price changes for the future on the base of the analysis of price changes in the past. It is based on the analysis of time series of prices and schedules – “charts”. Such instruments as the trading platform: trend lines, Fibonacci retracement levels, support and resistance levels, etc can be used in technical analysis. The idea is that people can look at historical data of price movement and can determine where the price can go in the future and from which level to start. Looking at the graphs you can identify trends and a variety of formations that can help you to find good trading opportunities for market entry.
The most important thing you’ll ever learn in technical analysis is the trend or direction of price movement. “The trend – is your friend.” The reason is that you are much more likely to make money when you can find a direction or trend. Technical analysis can help you to identify the price trends in its earliest stages and therefore can provide you with very profitable trading opportunities.
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