Fundamental or Technical

The two basic approaches to analysing the currency market are Fundamental Analysis and Technical Analysis. The fundamental analyst concentrates on the underlying causes of price movements, while the technical anlyst studies the prices movements themselves.

Fundamental Analysis
Fundamental Analysis focuses on the :

• economic
• social
• political
• geopolitical forces

These drive supply and demand. Fundamental analysts look at various macroeconomic indicators such as:

• economic growth rates
• interest rates
• inflation
• unemployment, etc.

However, there is no single set of beliefs that guide fundamental analysis. There are several theories as to how currencies should be valued. Do not try and analyse the fundamentals unless you are a financial expert. Let the experts do this and follow their lead by reading the charts.
Be aware when announcement are due.
Sometimes the experts are wrong and get caught by unpredictable actions.

Technical Analysis
Technical Analysis focuses on the study of price movements. Historical currency data is used to forecast the direction of future prices. The premise of technical analysis is that all current market information is already reflected in the price of that currency, therefore, studying price action is all that is required to make informed trading decisions.

The primary tools of the technical analyst are charts. Charts are used to identify trends and patterns in order to find profit opportunities. The most basic concept of technical analysis is that markets have a tendency to trend. Being able to identify trends in their earliest stage of development is the key to technical analysis.