Factors | Technical Analysis | Fundamental Analysis |
Focus | It focuses on studying historical price and volume data, along with other market indicators, to predict future price movements. Technical analysts believe that all relevant information about an asset is reflected in its price and trading patterns. | It focuses on analyzing the intrinsic value of an asset by examining various factors such as financial statements, economic indicators, industry trends, management quality, competitive landscape, and overall market conditions. |
Data Used | It primarily uses historical price and volume data, as well as technical indicators such as moving averages, support and resistance levels, trend lines, and chart patterns. | It relies on qualitative and quantitative data, including financial statements (income statement, balance sheet, cash flow statement), earnings reports, industry reports, economic data, news events, and company-specific information. |
Time Frame | It is often used for short-term trading and focuses on identifying short-term price patterns and trends that can be exploited for profit. | t is commonly used for long-term investing and aims to assess the intrinsic value of an asset over an extended period. Fundamental analysis considers factors that may impact the asset's value in the long run. |
Assumptions | It assumes that market prices follow trends and patterns and that historical price behavior can help predict future price movements. It also assumes that market participants behave in predictable patterns. | It assumes that the intrinsic value of an asset will ultimately drive its market price. By analyzing fundamental factors, investors can identify discrepancies between an asset's intrinsic value and its market price, which can present investment opportunities. |
Tools and techniques | It uses various tools and techniques such as charting software, trend lines, moving averages, oscillators, and other technical indicators to identify patterns and generate trading signals | It employs financial ratios, valuation models (such as discounted cash flow analysis), industry analysis, qualitative assessments, and company-specific research to evaluate the worth of an asset. |
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