​Fundamental vs. Technical Analysis: Which Is Better?

WikiFX Strategy (22 Jan.) - Fundamental analysis and technical analysis are two broad types of techniques used in the forex market. But which one of them is more efficient？

Technical analysis seeks to predict price movements by examining historical data, mainly price and volume. Popular technical indicators include the moving average (MA) and the moving average convergence divergence (MACD).

Fundamental analysis focuses on factors that might influence currency values, including unanticipated events, monetary and fiscal policies, etc.

Fundamental analysis could bring about reliable forecasts on the long-term exchange rates ahead of time. However, it cannot tell exactly where are the starting point, the determining reversal, and the turning point of the fluctuating exchange rate. Therefore, analysts should use fundamental analysis in conjunction with technical aspects as well as market psychology.

Some followers of the technical analysis may struggle in herding behavior. Once observing other bullish investors, they gravitate toward the same or similar investments without their own analysis.

To conclude, there is no technique that could fit all conditions in the market. Besides combining the two methods, investors should create their own trading strategy and trade on the basis of both theory and actual situation.

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