Chart Patterns: Technical Analysis and Fundamental Analysis

Although traders have discussed the pros and cons of technical and fundamental analysis for years, realistically they will most likely incorporate a little of both in their decision-making processes. Supporters of fundamental analysis in futures trading will almost certainly use a price chart before making a trade and those dedicated to technical analysis will take into consideration key fundamentals.

What’s the difference between fundamental and technical market analysis?

Fundamental analysis:

Those who focus on fundamental analysis when trading futures mainly take into account factors that may affect price direction, for example politics, weather, economics etc, so it’s therefore rather subjective – there is such a huge amount of fundamental information available, but it’s impossible for traders to have access to it all.

Technical Analysis:

Technical analysis when futures trading can be simple or complex, depending on your ability to operate market data. Traders who focus on technical analysis know that price is king! They focus on basic price chart patterns as their main source of data for a few reasons:

• They are able to study historical price chart patterns and base their decisions on past market action • Fundamentals (as above) are reflected in price • Price trends offer trading signals