What is the fundamental analysis?
When Fundamental analysis is mentioned in Forex it means the use of economic news, economic indicators and meetings, as well as natural events such as earthquakes, volcanoes and political events to assess the currency of a country.
Trading on currencies according to their economic conditions, where speculators are buying the strong against the sale of the weak.
When mentioned in shares, financial statements and earnings information are used to determine the fair value of the share, determine its present value and forecast its future value, as well as other economic factors.
Technical analysis uses charts to determine the direction of the current stock or currency to trade and identify the areas of sale and purchase to achieve profits. Technical analysis is defined as science and art as it consists of scientific bases based on the study of the price behavior of financial instruments (stock, To predict their future and the art of using technical tools to reach the right expectations.
Fundamental Analysis Better or Technical Analysis:
A different analysis can’t be preferred for each trader who is different from the other trader. He may prefer a fundamental analysis while preferring technical analysis, and we recommend mixing the two types of analysis to trade for maximum profit.
Even if you use the daily charts or the larger ones, the economic outlook will affect the analysis and can’t be neglected, if oil prices fall significantly, so the Canadian dollar may not be able to rise significantly or continue to rise from the base.
Economic factors: They include a set of economic indicators that we will talk about later.
Major events: wars, terrorist acts and natural events such as volcanoes and severe hurricanes.
Political factors: such as the change of the leader of the state or the election of a parliament, and thus these events usually affect the exchange rate significantly.
Psychological factors: They have a much greater impact on exchange rate changes.
Interest Rates: Interest rate expectations are the most important factor in assessing the current currency rate and future expectation.
Inflation: Inflation rates are very important in predicting the currency exchange rate.
Unemployment rates: a state report that refers to unemployment rates and subsidy rates granted by governments.
It should be noted that, the policy of the central bank is very influential on the exchange rate and expectations of the future of the currency and there are two types of deflationary monetary policy and there is expansionary monetary policy.