Among the several strategies to invest in Forex, there are two which are the most frequently used types of analysis, used to determine levels of security and risk that serve to make investment decisions. These analyzes are fundamental analysis and technical analysis.
Fundamental analysis involves analyzing the characteristics of a company or currency, its role in the economy of a country and try to predict whether it will improve or worsen. Now, technical analysis uses a different viewpoint. It does not focus on individual securities of companies, currencies or commodities; but it has a more global view and tries to analyze price movements in the overall market.
Technical analysis is the study of price movements. In short we could say that technical analysis refers to the graphics. The idea is that the person can look at the history of price movements, and on this basis, determine at some level where the price will go.
When traders examine the graphs, they can identify trends and patterns that will help them find the best trading opportunities.
Fundamental analysis in Forex is used to investigate the economic reports of the countries corresponding to foreign exchange. Analysts can take into account economic figures such as unemployment, domestic investment, import and export levels.
If you want to carry out fundamental analysis of a currency, first you must research the history of a country. The historical background of the economy of a country can tell a lot about its evolution and where it is heading, and what medium seeks to apply economic measures and what market relationship that exists in it. If a country has high levels of inflation but strong economic growth and a growing population, inflation pales against other values. Fundamental analysis is basically using the news to