Difference Between Fundamental and Technical Analysis with Comparison Chart

Technical analysis studies previous patterns, charts, and trends to make predictions concerning an organization’s future price movements. In other words, technical analysis can be defined as a method used to determine the upcoming price of securities based on charts to identify trends and patterns. Technical analysis is relevant for investments that are held for a shorter time. Technical analysis only considers the previous data and is useful solely for trading functions. Thus, the technical analysis aims to identify the perfect time for entering or exiting the market. Fundamental analysis and technical analysis are two different mechanisms that help in analysing the financial markets.

It is important to understand the purpose for which one or another type of analytics is used. For FA, it is relevant to test scenarios of the influence of various external factors. These can be micro and macroeconomic parameters, the objective quality of the project and its implementation, regulatory pressure, political factors, and so on. FA considers all the risks and their pressure on the price to give a medium- and long-term forecast. Technical analysis, on the other hand, is not based on the intrinsic value of the stock. The purpose of technical analysis is to find the predicted security values.