Summary: Three Types of Analysis | Pathshala

Three Types of Analysis

Q: What are the three main types of analysis?
Ans: There are three basic types of  market analysis: 1. Technical Analysis 2. Fundamental Analysis 3. Sentiment Analysis

 Q: Which type of analysis looks at historical price movements to determine the current trading conditions and potential price movement?
Technical analysis is the framework in which  traders study price movement. The theory is that a person can look at historical price movements and determine the current trading conditions and potential price movement.

Q:Which type of analysis looks at economic, social, and political forces that affect the supply and demand of an asset?
Fundamental analysis is a way of looking at the  market by analyzing economic, social, and political forces that may affect the supply and demand of an asset.

Q:If you wanted to buy the euro because Germany's economy is booming, which type of analysis are you doing?   

The idea behind fundamental analysis is that if a country’s current or future economic outlook is good, their currency should strengthen. The better shape a country’s economy is, the more foreign businesses and investors will invest in that country. This results in the need to purchase that country’s currency to obtain those assets.

 Q: When a trader believes that price will go up, he is feeling...
The term “bullish” is used to describe that a person’s, or group’s, outlook on an asset is optimistic (i.e., that the asset will rise in value

 Q: The market reflects all available market information because all traders have access to the same pieces of data.
The market basically represents what all traders – you, Price-crawler, or Celine from the don't shop – feel about the market. Each trader’s thoughts and opinions, which are expressed through whatever position they take, helps form the overall sentiment of the market regardless of what information is out there.

 Q: Support and resistance levels are associated with what type of analysis?
Have you ever heard the old adage, “History tends to repeat itself“? Well, that’s basically what technical analysis is all about! If a price level held as a key support or resistance in the past, traders will keep an eye out for it and base their trades around that historical price level.
 
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