Fundamental analysis vs technical analysis

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The main aim of all analysis is determining the moments when traders should open and close their positions, maximizing their profits in the process. Fundamental and technical analyses complement one another in many aspects. Technical analysis uses mathematical and statistical methods and tries to determine the direction of the market, by which traders will decide to sell or buy a particular currency pair.

The basic instruments used in technical analysis are price charts along with different indicators. Numerous methods of charts analysis and different types of charts (line, bar, column, point & figure, and candle etc.) can be utilized.

Fundamental analysis is also used in equity markets to price the intrinsic share value and to compare it with its fair price. Fundamental analysis is based on financial reports, economic indicators, news from the financial world and market experts’ recommendation – the last of which of course makes it not very precise.

These two analyses are divided into many aspects, however, they both are based on two separate information sources – technical analysis on past data base and fundamental analysis on resources in the economic situations of a particular country and important economic events.