COMPARATIVE ANALYSIS OF TECHNICAL AND FUNDAMENTAL TRADING STRATEGIES IN FOREX MARKETS

AUTHOR – MOHITH PRABHU, STUDENT AT GLOBAL INSTITUTE OF BUSINESS STUDIES

BEST CITATION – MOHITH PRABHU, COMPARATIVE ANALYSIS OF TECHNICAL AND FUNDAMENTAL TRADING STRATEGIES IN FOREX MARKETS, ILE MULTIDISCIPLINARY JOURNAL, 4 (1) OF 2025, PG. 251-260, APIS – 3920-0007 | ISSN – 2583-7230

ABSTRACT

The Forex market, with daily trading volumes exceeding $7 trillion, is the largest financial market globally. Its participants—ranging from central banks to individual traders—utilize various strategies to profit from currency value fluctuations. Among these, technical and fundamental strategies are the most commonly employed. Technical strategies rely on historical price data and indicators, assuming that past trends can predict future movements. Conversely, fundamental strategies assess macroeconomic factors like interest rates, inflation, and geopolitical developments to evaluate a currency’s intrinsic value.

This paper explores these two methodologies, comparing their strengths, weaknesses, and suitability under different market conditions. It also investigates the role of emerging technologies, particularly artificial intelligence (AI), in enhancing these strategies. The findings suggest that while technical analysis excels in short-term trading and fundamental analysis is better for long-term trends, combining both approaches yields optimal results. AI further amplifies their effectiveness by processing large datasets, identifying patterns, and reducing human bias.

Key Words – Forex market, Trading strategies, Technical analysis, Fundamental analysis, Currency fluctuations, Price patterns, Economic indicators, Moving averages, Relative Strength Index (RSI), Sentiment analysis, AI in trading, Machine learning, Algorithmic trading, Hybrid strategies, Risk management.