Dec2008

Forex Fundamental Analysis

There are two major methods of analysis used in forecasting the behavior of the Forex market; they are Technical analysis and Fundamental analysis.
They differ greatly but the trader can apply both to complement and supplement the study of the market for achieving superior results.
They also have the same goal i.e. to predict a price or movement of the market. The technical analysis studies the effect while the fundamental analysis studies the cause of market movement.

Fundamental Analysis has a very broad spectrum. One aspect looks at the general or qualitative factors; the other side considers tangible and measurable i.e. the quantitative factors.
Use Fundamental Analysis With Technical Analysis
In general the fundamental analysis method looks to forecast the future of price movements based on events that have not taken place yet. Important factors and statistical methods are used to predict how these events will affect supply and demand and the rates of the Forex.
We must remember that Fundamental analysis and Technical analysis are not the reliable factor on their own, but each needs to be used in conjunction with the other to form opinion about the changes in the Forex market.

Fundamental analysis is therefore the method of forecasting the future price movements based on economic, political, environmental and other relevant factors and statistics that are going to affect the basic supply and demand of the market.
A fundamental analysis involves in-depth study of the market. It focuses on what is going to happen in a market based on supply and demand, seasonal cycles, and weather and government policy.