Market Analysis

MARKET ANALYSIS

There are two key approaches used by traders everywhere around the world to analyze the markets and make trading decisions: Fundamental Analysis and Technical Analysis. Fundamental analysis encompasses analyzing a country, company or industry’s economic factors to determine the approximate intrinsic financial value of the asset, while technical analysis looks at the asset’s history and patterns with the presumption that an underlying asset’s price is already accurately reflective of all publicly-available data and prioritizes the mathematical and statistical analysis of price movements instead.

Fundamental Analysis

Fundamental trading focuses on both macroeconomic as well as microeconomic factors. In fundamental analysis, traders will look at the fundamental indicators of an economy to try to understand whether a currency is undervalued or overvalued, and how its value is likely to move relative to another currency. Fundamental analysis can be highly complex, involving the many elements of a country’s economic data that can indicate future trade and investment trends. One of the biggest part of fundamental analysis involves analysis of financial statements, also known as quantitative analysis.

Factors of Fundamental Analysis:

Interest-Rate
Interest Rate

When a country raises its interest rates, the country's currency strengthens in relation to other currencies as assets are shifted away from it to gain a higher return elsewhere.

Market-Sentiment
Market Sentiment

Market sentiment is based on the emotional responses of a market, or its psychological effect, and this thought of to be reflected in the activity and price movement of the assets traded in that market.

gdp-icon-new
GDP

Growing GDP indicates the pace at which a country's economy is growing (or shrinking) and is considered the broadest indicator of economic output and growth.

Technical Analysis

Technical trading is the analysis of chart patterns, trend lines, support and resistance, price history, indicators and others. The primary concept is to identify trends and patterns with market data in order to make informative market predictions and is often used in conjunction with other forms of market analysis such as fundamental analysis. Technical analysis looks at demand and supply in the market to determine where the price trend is headed. It is more concerned with understanding the market sentiment behind price trends, rather than analyzing an asset’s fundamental attributes.

Technical Analysis Methods:

Trends-Lines
TREND Lines and Chart Patterns

Because technical analysis is built on the assumption that prices trend, trend lines are an important tool for a trader to identify and confirm a trend.

Support-and-Resistance
Support and Resistance

Support and resistance is a concept that the movement of the price of a security will tend to stop and reverse at certain predetermined price levels.

Historical-Data-Analysis
Historical Data Analysis

Historical data analysis is the study of recorded market-related data such as price, volatility and volume to develop a viable trading plan or improving an existing methodology.