Core Fundamental Forces and How to Monitor Them

Abstract

Let us clarify the contrast between technical and fundamental analysis. Technical analysis is static, and focuses on mapping price action. All the analysis exists in a two-dimensional space along an X axis of time, and a Y axis of price. Technical traders are therefore chartists. They are the equivalent of radiologists who diagnose the structure of the body and detect patterns that point to disease or a breakdown. In contrast, fundamental traders are, in a sense, psychiatrists, and perhaps cosmologists; they diagnose the causation and the forces behind price behavior. Of course, the fundamental forces are inter-market and outside of the two dimensions of a price chart. In a sense, fundamental forces are the third dimension that deserve trader attention in trading currency pairs. While we cannot see fundamental forces, like gravity and electricity, we know they exist and shape our world.