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Education · Fundamental Analysis · Chapter 1 of 3

What is fundamental analysis

5 min01 / 03

If technical analysis asks 'how is price moving', fundamental analysis asks 'why'. It looks for the fair value of an asset based on the underlying economic conditions, policy, and supply-demand.

What moves price

For currencies, the biggest driver is central bank policy, especially interest rate decisions. A country with higher rates attracts global capital, and its currency tends to strengthen.

Central BankRate ↑Higher YieldCapital inflowCurrencyStrengthens ↑
Rate hike → higher yield → capital inflow → currency strengthens.

For commodities like gold and oil, the drivers are global supply & demand plus risk sentiment. Gold, for example, tends to rise when inflation is high or when there's geopolitical uncertainty.

Fundamental vs technical

The two aren't enemies, they complement each other. Fundamentals give medium- and long-term direction; technicals give sharper entry and exit timing. Experienced traders usually blend both.

If you often feel 'price moved but I don't know why', that's a signal to deepen your fundamentals. The next chapter shows how to read them.

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