Technical Analysis vs Fundamental Analysis

One of the dominant debates in financial market analysis is the relative validity of the two major
tiers of analysis: Fundamental and technical. In Forex, several studies concluded that fundamental
analysis was more effective in predicting trends for the long-term (longer than one year), while
technical analysis was more appropriate for shorter time horizons (0-90 days). Combining both
approaches was suggested to be best suited for periods between 3 months and one year.
Nonetheless, further empirical evidence reveals that technical analysis of long-term trends helps
identify longer-term technical "waves", and that fundamental factors do trigger short-term
developments.
But most traders abide by technical analysis because it does not require hours of study. Technical
analysts can follow many currencies at one time. Fundamental analysts, however, tend to
specialize due to the overwhelming amount of data in the market. Technical analysis works well
because the currency market tends to develop strong trends. Once technical analysis is mastered,
it can be applied with equal ease to any time frame or currency traded.