Fundamental Analysis: Why I Stopped Looking Only at Charts and Started Reading News About Farmers and Interest Rates
Hi, this is NorthRay.đź’Ą
For a long time, I thought: “Technical analysis is enough. The chart reflects everything. Why should I bother with reports, GDP figures, and interest rates?”
I drew support and resistance levels, watched the stochastic oscillator, and opened trades.
And often, technical analysis would tell me “buy.” The price would move up at first, then suddenly reverse and crash lower. No apparent reason. No warning.
I’d sit there thinking:
“What went wrong? The level was solid...”
Then I started reading the news.
It turned out that inflation data had been released in the U.S. that day. Or the Federal Reserve Chair had made comments about interest rates. Or Europe was dealing with a crisis.
My technical analysis wasn’t wrong. It simply didn’t know what the market already knew.
That’s when I realized: the chart is the result. The cause lies in fundamentals.
So I started studying fundamental analysis.đź’¬
What Is Fundamental Analysis? (In Simple Terms)If technical analysis focuses on the chart itself (candlesticks, levels, indicators), fundamental analysis focuses on what’s behind the chart.
A country's economy. Central bank actions. Politics. Natural disasters. Wars. Elections.
Everything that can affect the supply and demand of currencies, stocks, or commodities.
A simple example:
Imagine you want to buy an apartment in a city.
Technical analysis looks at housing prices over the past year and says:
"Prices usually rise in spring and fall in autumn. It's spring now, so prices will probably go up."
Fundamental analysis looks at the city itself:
Is a new factory being built? (More people move in → prices rise.)
Is a major employer shutting down? (People move away → prices fall.)
Are mortgage rates being lowered? (Housing becomes more affordable → prices rise.)
Technical analysis is about history and recurring patterns.
Fundamental analysis is about...