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There is no hard and fast rule on whether to use fundamental or technical analysis when it comes to forex trading and analysis. There are good things to be said about technical analysis and there are equally good things to be said about fundamental analysis. I think that a persons preference aligns with certain other preferences and probably align to whether you are a right brain thinker or a left brain thinker and as is often the case with such things you just need to firstly understand the differences between them to be able to make a choice in what you might use.

I myself prefer to use primarily technical analysis. With Forex of course no amount of technical analysis will provide any answers to what amounts to a trading halt, that is the market trading sideways prior to some major point of fundamental interest such as an election an interest rate change or debt announcements etc that alter the course of the markets.  All the market indicator tools around are primarily about technical analysis and metatrader has some great parts for this.

For fundamental analysis on the forex market you need to have a clear understanding on the relationship of interest rates and all other fundamentals that might affect the movement of a currency pair. What does a rising interest rate in Japan or Australia have on currency movements. What is the likely attitude of the market to a change of government at the upcoming election.

Technical analysts don’t need to so strongly know about the impact of these fundamental events however  the technical analyst does need to be aware that such events are most likely to create trading opportunities and be on the lookout for the signals that say game on. What the  technical analyst needs to do is find the opportunities by monitoring the graphs to find when price movement is to occur. A technical trader should not go into the market until a trend has formed alleviating the number of time when the market fails to move from the news or worse takes a temporary opposite position that activates a stop loss. Use what was Warren Buffets share trading strategy to take small but almost guaranteed successes rather than speculating with larger opportunities that might go bad and damage your capital.

From this one can conclude that neither is right, but how our brains think will probably guide the best choice. One thing to keep in mind is that a trader that is versed in both techniques of analysis and is able to separate what choices have been made with a trade in the market will likely be a very successful trader. If you choose to take a trading position with fundamental analysis don’t second guess yourself with technical analysis  and vice versa.