Differences Between Technical and Fundamental Analyses

Technical and Fundamental Analysis
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Technical and Fundamental Analysis
Fundamental and technical analysis are significant tools used to analyze the financial markets. In particular, technical analysis focuses on the stock price movement and uses the data available to predict the future. For instance, stock prices can be estimated by studying a company’s financial statements, balance sheets, management processes, cash flow statements, and specific industries (Gupta & Vaidya, 2022). In contrast, fundamental analysis can be done by looking at financial and economic factors influencing a specific firm. For example, one can use past patterns, trends, and charts to predict stock price movements.
Fundamental analysis uses a long-term approach, while technical analysis relies on a short-term method when analyzing the market. For instance, stock charts in technical analysis can be analyzed in days, weeks, and months while fundamental analysis emphasizes data evaluation in multiple years or quarters (Petrusheva & Jordanoski, 2016). In addition, the fundamental analysis identifies the stock's intrinsic value, and decisions are usually based on the evaluated statistics and the available information. On the contrary, the technical analysis identifies when t...