There are three types of trading analysis. You may have heard about them, but perhaps not. We will talk about them in this article.
However, it should be mentioned that all three types of analysis must be harmoniously combined for a successful trading process.
Not one, not two, all three. Fundamental, technical, and event intensity analysis (sentimental analysis) should work together and complement each other favorably to increase accuracy and confidence.
So yes, you may have a favorite type of trading analysis, but this does not mean that you can ignore the rest.
The fundamental analysis is to track economic, political and social events and find links between them and a particular asset.
This type of analysis usually includes knowledge of current economic issues, attention to central bank meetings and their monetary policy, searching for tips from lawmakers, tracking protests and tragic events.
For example, if you analyze the US dollar from a fundamental position, you need to closely monitor employment and inflation data, speeches of the Fed Chairman Janet Yellen, or the Treasury bond yields.
Do you know the phrase “history tends to repeat”? This principle is the basis of technical analysis. The basic idea is that prices are a reflection of their context. That is why technical analysis is based on historical price development, available in the form of graphs.
Technical analysis mainly relies on indicators such as Bollinger Bands, Fibonacci, moving averages and more to determine the direction of prices in the near, medium and long term.
However, traders should understand that technical analysis is subjective. Different people can read the same schedule in different ways.
Analysis of the intensity of events
Long or short positions? Buy or sell? Bulls or bears? You guessed what I was talking about. On the situation on the market. Market sentiment analysis is the determination of whether traders put growth or collapse and an understanding of whether the market is overbought or oversold in order to correct.