Financial Education

RavenProfit.com provides Fundamentals for Tickers

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Technical Analysis

Technical analysis uses patterns on a chart created by price to determine where the market is moving. The movement of price is tracked on charts with various indicators or patterns to help determine where price is going to move next. Technical analysis uses the visual representation of price to help illustrate where price is and where it may move in the future. Common areas of interest to traders on charts are levels of supply and resistance. Supply and resistance can be indicated by many indications, such as moving averages, previous highs and lows and previous price levels that price could not move above or below. Traders will look at these levels and make buy and sell decisions when price is at a level that the technical analyst believes is a key buy or sell level. While each form of analysis relies on different data and different assumptions, since they are both referencing the same market the information provided can be used together to build a more complete analysis of the market you want to trade. ravenprofit.com

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Fundamental Analysis

Fundamental analysis refers to analyzing the factors that contribute to a futures contract’s supply and demand. For example, a trader might review Crude Oil Inventories to form an assumption about whether supply will increase or decrease in the future, causing the price of Crude Oil to move up or down in the future. This trader might choose to buy oil now with the assumption that prices will move higher based on his fundamental analysis from the inventories report. There are many factors that will increase demand and supply for a market. These factors are complex, interrelated and their effect on price can change over time. A detailed model and analysis is required to create a complete fundamental picture of the market. Supply and demand is typically slow to react as supply and demand are with a strategy which protects them from shocks to the market either in the form of supply or demand. These shocks can come from events such as natural disasters, supply chain issues or product defects. For example, if there a natural disaster and a major port for unloading of crude oil is damaged so that ships cannot unload their cargo, creating a surprise and immediate reduction in supply, that was not forecast or predicted in a supply and demand model. ravenprofit.com 

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Using Fundamental and Technical Analysis Together

When looking at future demand and supply, technical analysis and fundamental analysis are many times combined to give the trader a bigger picture view of the market. There are many traders who will build pricing models and then look at charts to confirm their assumptions or fine tune entries and exits. There are also many traders who review charts then look at the fundamentals to see if future supply and demand is sufficient to potentially move price through support or resistance or create a supply or demand situation which makes price potentially trend for a long period of time. There are some shocks to the market that have supply and demand effects that can last months or years.

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