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What Do You Prefer, Technical Or Fundamental Analysis In Forex?

As you may know currency market as any other market is analyzed by looking at charts and technical indicators as well as looking at the overall economic picture. The first way called technical analysis and the second one is fundamental analysis.Below are my thoughts and my currency trading tips.

The question arises: which way of analyzing the market should you take? There is no right or wrong answer to this question. You probably already met traders who make money consistently in Forex. They would defend their own approach and think that the other one is for losers.

For example those traders who use economic news would tell you that only the fundamental factors move the price of the currency. On the other hand technical traders would argue that the chart patterns repeat themselves signaling about the direction of the price movement.

Some people looking at the volatility caused by the economic news releases may think that it’s the most reliable approach to trade in Forex. However the technical analysis patterns are also very reliable if you know how to recognize them. Technical analysis is very valuable when there is no economic news around to make a huge impact on the market.

If you use only technical analysis by identifying the technical patterns and not paying attention to the fundamental factors, then any major economic event can move a currency pair against your position. There are indeed some regular economic news releases that can move a currency pair up to 100 pips in a matter of few seconds.That’s the reason why you need to learn Forex trading.

Following the worldwide economy and politics can help you to predict the price of the currency pair. The fundamental news releases not only move the price of the pair in a short term but they can set up the direction of the movement for the longer period of time. And during that period technical pattern recognition will help you identify profitable trades.

Price in Forex market always moves up and down. Fundamental traders are right it is the economic factors behind the big movements. But it is the technical analysis that can estimate how long the momentum of the movement set by an economic news can last. It can give you the exact levels to place your orders.

That’s the reason why most successful traders pay attention to technical analysis as well as to fundamental one. It is always best to have a balanced approach. Nowadays a lot more traders use only technical analysis. If you one of them at least know the schedule of the major news releases to adjust your trades properly.

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