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The " Fundamental and Technical Analysis Coordination " article examines and elaborates upon the recommendation of the use of both fundamental and technical analysis techniques for commodities and futures contracts..
True believers in fundamental analysis and technical analysis usually disparage each other's techniques in analyzing markets and finding successful trading opportunities. That does not mean that an individual investor cannot benefit from the methods used by each. Technical analysts are price, volume, and open interest fanatics. They don't want to be bothered by information that will distract them from their charts. Fundamental analysts give no consideration to any technical factors while researching their markets.
Technical vs. fundamental – benefiting from both
It would be foolish not to use any available information or technique that can provide successful outcomes. Technical indicators confirm the underlying fundamental situation within a particular market. Supply and demand ultimately explain all price movements. Even if an individual prefers technical analysis, it would be unwise not to remain aware of all the fundamental information available concerning futures and commodities markets. At a minimum, a technical analyst should be aware of the fundamental factors that have produced the indicators within his charts that he will be acting upon. Just observing market movements at the issuance of fundamental news reports is in and of itself a reliable technical indicator.
Conversely, someone who believes in the primary importance of fundamental analysis should not be averse in observing technical indicators in order to confirm his analysis or as a signal that the fundamental nature of the market is about to change. The use of computer-generated technical charts clearly and graphically exhibiting existing market trends can only help someone basing his analysis on fundamental principles to confirm or question his findings.
Reconciliation of conflicting analysis data
It has not been uncommon in history where fundamental and technical analysis proffered completely opposite findings. The skilled successful individual trader should have a fluid understanding of both techniques. Each should complement and confirm that investors anticipated market conditions.
If contrary recommendations are encountered, they should be viewed as a warning sign that perhaps it is not the ideal time to be taking a position. Regardless, anyone interested in trading in the commodities and futures markets should be aware of all the information and techniques available. More is better than less. You will never make an unsuccessful trade because you had too much information available in order to make your decision. It is highly recommended that any future investor in the commodities and futures markets be thoroughly versed in both fundamental and technical analysis.
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