Technical and Fundamental Analysis

There are 2 basic approaches to analyzing the forex currency market, fundamental analysis and
technical analysis. The fundamental analyst concentrates on the underlying causes of price
movements, while the technical analyst studies the price movements themselves.
 Technical analysis
 Technical Analysis is what one uses  to predict future price movements, based on
past time framed analysis and the / understanding of graphics drawn by the meta platform. Although within a
Technical Analysis various thought patterns exist, generally all are based on historical graphics of
a currency. As long as one realizes the various differences of Fundamental and Technical
Analysis, both can be used to support one another, even though both may present different
conclusions.
 Fundamental Analysis
The study of specific factors, such as wars, discoveries, and changes in Government policies,
which influence supply and demand, and consequently prices in the market place.
Fundamental analysis comprises the examination of macroeconomic indicators, asset markets and
political considerations when evaluating a nation’s currency in terms of another. Macroeconomic
indicators include figures such as growth rates; as measured by Gross Domestic Product, interest
rates, inflation, unemployment, money supply, foreign exchange reserves and productivity. Asset
markets comprise stocks, bonds and real estate. Political considerations impact the level of
confidence in a nation’s government, the climate of stability and level of certainty.
Sometimes governments stand in the way of market forces impacting their currencies, and hence,
intervene to keep currencies from deviating markedly from undesired levels. Currency
interventions are conducted by central banks and usually have a notable, albeit a temporary
impact on FX markets. A central bank could undertake unilateral purchases/sales of its currency
against another currency; or engage in concerted intervention in which it collaborates with other
central banks for a much more pronounced effect. Alternatively, some countries can manage to
move their currencies, merely by hinting, or threatening to intervene