Technical vs. Fundamental Analysis 1. Technical Analysis * Definition: Technical analysis focuses on analyzing price charts, patterns, and statistical indicators to predict future price movements. * Methods: Traders use tools like Moving Averages, RSI, and MACD to identify trends and entry/exit points. * Strengths: It’s particularly useful for short-term trading, as it helps traders capitalize on market patterns without needing deep knowledge of the asset's fundamentals. 2. Fundamental Analysis * Definition: Fundamental analysis involves evaluating an asset’s intrinsic value by examining economic data, financial statements, and external factors. * Methods: Key indicators include GDP, interest rates, earnings reports, and economic forecasts. * Strengths: This approach suits long-term trading and investing, providing insights into the asset’s overall health and future potential. Key Difference * While technical analysis emphasizes price patterns, fundamental analysis focuses on the asset's underlying value. Both can be used together for a well-rounded trading strategy.