There are two main types of market analysis: fundamental analysis and technical analysis.
The fundamental analysis is based on the fact that market prices reflect the current situation of the world economy or of any country in particular. This type of analysis involves a detailed study of different financial indicators, as well as information and news about financial, political and economic events of different countries and economies in general.
Among the indicators that are an integral part of the financial analysis, we can highlight the following groups (which, in turn, include more indicators of different types):
- Macroeconomic indicators
- Indicators of production and sales dynamics
- Indicators that reflect the situation with unemployment/employment
- Inflation and its changes
- Construction sector
- Consumer activity
- Movements of capital
It is important to mention that a unique quotation system of the Forex market was elaborated through the American Dollar, which in turn means that the behavior of the economy of the United States and the American Dollar is an important factor at the time of analyzing market movements and trends.
Technical analysis is one of the most powerful instruments used by traders and investors to predict possible movements and the state of markets. It consists in the detailed analysis of the price movement charts. This type of analysis is used a lot to predict short period trends, as well as in the situations when the fundamental analysis results to be inefficient.
This type of analysis offers a variety of temporary charts: from one minute to very long periods, such as months, or even years.
At the same time, the charts can vary according to the type, being these the linear charts, charts by “ticks”, charts “bar chart” or “Japanese” candles. Many times traders use various types of charts to identify bullish or bearish market trends.
The most commonly used instruments for this type of analysis are:
- Support lines
- Resistance lines
- Moving average
and some more.
For more information about the different types of analysis, please contact our specialists