Technical Analysis or Fundamental Analysis? Using Both Together

Technical analysis: what is the price itself telling us?

Technical analysis is based on the assumption that past price movements and trading volume provide clues about future price behavior. Support/resistance levels, trendlines, moving averages (SMA/EMA), and indicators like RSI are the primary tools of this approach.

The strong side of technical analysis is that it provides concrete, measurable levels for entry/exit timing and risk management (determining where to place your stop-loss). Its weak side is that an unexpected news flow (for instance, a central bank decision) can invalidate technical levels instantly.

Fundamental analysis: what drives the price?

Fundamental analysis evaluates the value of a currency through interest rates, inflation, employment data, growth figures, and central bank policies. For example, a central bank raising interest rates generally increases demand for that currency — because assets held in that currency offer higher returns.

The strength of fundamental analysis is that it allows you to understand the logic behind large and sustainable trends. Its weakness is that, while it answers the question "how will an interest rate decision affect the market," it does not answer the question "today, at what time, from which level" with the same clarity.

Which method suits whom?

Short-term traders (intraday or scalping) usually focus on technical analysis, as decision times occur within hours or even minutes. For investors who hold position sizes for weeks/months, fundamental analysis is generally more decisive. For most investors, the ideal approach is not to choose one completely, but to assign a certain weight to both according to their own time horizon.