What’s the Difference Between Fundamental and Technical Analysis?

Tag: intrinsic value, cryptocurrency price, volume data, crypto market, fundamental and technical analysis

There are many different ways for traders to access the changeable crypto market. For example, fundamental analysis evaluates cryptocurrencies by attempting to measure their intrinsic value while technical analysis looks to statistical trends in the cryptocurrencies’ price and volume. Both methods are used for researching and forecasting future trends in crypto prices. By using these methods, traders can get a better understanding of the market sentiment and make accurate predictions and rational decisions.

Fundamental Analysis

Fundamental analysts study a company’s financial strength and performance, competitors, and the economy to evaluate its intrinsic value. The most important source of data for fundamental analysis is the company’s financial statements, including the income statement, balance sheet, and cash flow statements, etc.

Technical Analysis 

It is based only on cryptocurrency price or volume data. Patterns often repeat themselves because investors always behave in the same way in the same situation. The purpose of the technical analysis is to identify the most likely scenarios and how market participants have acted in the past and how they may act in the future.

Popular technical analysis signals include simple moving averages (SMA), support and resistance levels, trendlines, and momentum indicators.

Debate

The debate over fundamental and technical analysis is contentious. However, they can both have their place. Fundamental analysis is more useful for long-term investors, while technical analysis is more suitable for short-term traders and catching up with the market timing. Both can also be effectively combined together to plan and execute investments over the medium and long term.

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Comments (2)

[…] tools for traders to access the changeable crypto market. One of them is an approach known as Technical Analysis. Traders can get a better understanding of the market sentiment and make more accurate predictions […]

[…] and resistance level is more of a market concept than a technical indicator. There are far better technical analysis tools that incorporate these concepts, like moving average, trendlines, which are more dynamic than […]

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