How to differentiate between technical analysis and fundamental analysis - Navi+ - GogoJungle | Auto Trading - Market Analysis

Trading method market analysis approach | How to use technical analysis and fundamental analysis

In FX and stock investing, "how to analyze the market" greatly influences trading results.

There are two main approaches to market analysis: Technical analysis and Fundamental analysis.

Many beginner traders tend to favor one or the other, but in reality, the key to success is to combine both in a balanced way.

In this article, we will explain the characteristics of each analysis method and how to utilize them.

What is technical analysis?

Technical analysis is a method of analyzing charts based on past price data and volume to predict future price movements.

The aim is to read the "patterns in the market" from these figures and shapes.

The biggest advantage of technical analysis is that it allows objective buy/sell decisions.

Because signals can be confirmed numerically or graphically, it is less swayed by emotions.

But there are caveats.

That is, it tends to be less effective in markets where there is no discernible regularity.

What is fundamental analysis?

On the other hand, fundamental analysis is a method of analyzing the background factors that shape the market and predicting their impact on prices.

Examples include the following:

Economic indicators of various countries (GDP, employment data, inflation rate, etc.)
Central bank monetary policy (rate hikes and cuts)
International relations and geopolitical risks
Statements by key figures and financial market news

In a broad sense, fundamental analysis includes economic activity itself, news, and international relations.

In a narrower sense, fundamental analysis focuses on external factors directly affecting specific currencies or instruments.

For example, in FX, "U.S. Treasury yields" or "interest rate differentials" are typical.

Relationship between technical analysis and fundamental analysis

What matters here is not to bias toward only one side.

There are times when the market experiences real demand-driven flows that create regularities.

In such cases, technical analysis is effective.

However, in markets with summer doldrums or ahead of major events, regularities may break down.

Fundamental analysis becomes a weapon in those times.

Example: How to overcome a summer doldrums market?

During the summer, overseas markets enter vacation mode and trading volume decreases.

This is the so-called "summer doldrums market."

In such phases, entry points may be hard to find with technical analysis alone.

However, by checking fundamental factors such as "rising U.S. Treasury yields" or "central bank policy stance,"

you can identify opportunities to capture a larger trend even in a market that looks stagnant.

In other words, broadening environmental awareness leads to profit opportunities.

It is important not to separate into technical vs fundamental camps

"I am a technical trader"

"No, I am a fundamental trader"

If you limit your own analysis style like this, you cannot respond flexibly to the market.

Markets are always changing,

By switching as such, you can achieve more stable results.

Summary — Market analysis should be thought of as a two-wheeled vehicle

There are two approaches to market analysis: Technical analysis and Fundamental analysis.

Instead of leaning toward one side, it is important to appropriately use both according to the market environment.

With this approach, you can find opportunities even in stagnating phases like summer doldrums and aim for substantial profits.

From today, try analyzing the market with the two-wheel approach of “Technical × Fundamentals.”