Fundamental vs technical analysis: the differences explained
Fundamental analysis looks at the economic forces behind a currency: interest rates, inflation, growth and politics.
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Fundamental analysis looks at the economic forces behind a currency: interest rates, inflation, growth and politics. Technical analysis studies price itself: trends, levels and patterns on the chart. Most experienced forex traders use some of both.
Side by side
| Fundamental | Technical analysis | |
|---|---|---|
| Question it answers | Why a market should move | When and where to act |
| Main inputs | Central bank policy, data releases, flows | Price, support and resistance, indicators, patterns |
| Time horizon | Often medium to long term | Any time frame |
| Strength | Explains big trends and event risk | Gives precise entries, stops and targets |
| Weakness | Timing can be vague | Can ignore the reason behind a move |
How they work together
A common approach is to use fundamentals to choose the direction or decide when to stand aside, and technicals to time the trade and place the stop. For example, a trader may avoid opening a new position just before an FOMC decision, then use support and resistance to plan an entry afterwards.
Learning fundamentals
Start with central banks and the main economic events, then read the weekly outlooks to see how they come together.
Learning technicals
Begin with candlestick charts, support and resistance and trends and moving averages. The chart patterns e-book goes deeper.
Whichever approach you choose, Forexuro signals give a defined entry, stop and targets; see the forex signals page. Daily market notes are free on the Forexuro Telegram channel.
Related reading
- Interest rates and currencies
- Support and resistance basics
- Economic events explained
- Weekly forecasts
- All comparisons
Frequently asked questions
Which is better for forex?
Neither on its own; they answer different questions, and many traders combine them.
Does technical analysis work on gold?
Traders apply it to gold as to currencies, but gold also reacts strongly to fundamentals such as real yields.
Do I need economics training for fundamentals?
No. Understanding interest rates, inflation and the main releases covers most of what moves currencies.
Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.