Methods of forecasting the currency market include Fundamental Analysis and Technical Analysis. Fundamental analysis helps in evaluating and assessing the assets based on their intrinsic value. It is dependent on external factors where decisions are based on available information and evaluated statistics (Lyle & Yohn, 2021). Its primary purpose is analyzing entity basics and is relevant for long-term investment. Fundamental analysis examines ongoing trends of the industry, financial data, and the performance of the competitor companies. Concepts used here are the return on assets and return on equity.
Technical Analysis is based on the previously collected data on which the future forecast will be predicted and depends on the patterns from past trades (Pramudya & Ichsani, 2020). This analysis is much more accurate and can predict the future course effectively as compared to Fundamental Analysis. It focuses on short-term investments and identifies the right time to invest or withdraw investments from the market. It uses charts such as price data such as MACD, where the most used indicator is the simple moving average.
Reference
Lyle, M. R., & Yohn, T. L. (2021). Fundamental analysis and mean-variance optimal portfolios. The Accounting Review, 96(6), 303-327.
Pramudya, R., & Ichsani, S. (2020). The efficiency of technical Analysis for the stock trading. International Journal of Finance & Banking Studies, 9(1), 58-67.