Been trading for a while but still get confused about when to use fundamentals versus technicals.
Like do you guys stick to one approach or mix both? What actually makes them different in practice?
Fundamentals show why a currency might move. Technicals show when it’s actually moving.
Learned this the hard way in 2019 - kept buying EUR/USD because of good eurozone data, but the charts screamed downtrend. Lost 800 pips ignoring what price was doing.
Now I use fundamentals for the big picture. Fed hiking rates? USD probably strengthens. But I wait for technical confirmation before entering. Doesn’t matter how bullish the story is if you’re buying at resistance.
Day trading? Technicals matter way more. News spikes price for 30 minutes, but support and resistance work all day. Swing trades lasting weeks? That’s when fundamentals matter since they drive longer trends.
Fundamentals focus on news and economic data. Technicals rely on charts and indicators. I use both, but technicals give me better entry points for quick trades.
Most people overthink this stuff though.
Fundamentals focus on economic data and news that can affect currencies over a longer period, like weeks or months.
On the other hand, technicals are about analyzing price charts and patterns for deciding when to enter or exit trades.
I generally choose the direction based on fundamentals and then rely on technicals for the best timing. This method is typically more effective than just trading on news events alone or disregarding the overall economic context.