Technical vs Fundamental Analysis
Fundamental analysis tells us about the seasonal directions of the market. It is more accurate when it is telling the dominant direction of the market over a period that is a month or more. Yes, some claim to be able to trade even 1-minute charts through fundamental analysis but this won’t be purely fundamental analysis and in most cases it is inaccurate.
Technical analysis on the other hand works well on its own when trading certain patterns over the smaller time frames and even the bigger ones too. However, technical analysis has an even better edge when it is traded with respect to the underlying fundamental conditions that are present in the markets.
Some may argue that with technical analysis I shouldn’t even care about fundamentals if I have a solid technical strategy. I don’t dispute this. Some may actually be profitable with it. After all, trading is not an exact science. Rather it is more of an art and every strategy is possible and may be profitable. But generally having a component of both sides into your trading strategy does boost your trading overall. For instance, most technical patterns that are profitable during normal trading sessions are not that profitable during election times as well as NFP Fridays. On such days the markets look like they are drunk for some reason for the strictly technical traders. But those who mastered their fundamentals perfectly understand these conditions.
At the same time, fundamental news like for instance change in the exchange rate may delay affecting the markets depending on where we are technical. If there is an increase in the interest rates for the British pound for example which is bullish fundamental news happens when we are at an all-time high technically then the price may still fall for but then the news will later affect it and the bullish run will then kick in
The question has always been asked wrongly is the problem with this debate. It’s not a question of Fundamental versus Technical analysis but rather it should be which one do you subjectively understand more.