TECHNICAL ANALYSIS VS FUNDAMENTAL ANALYSIS: Clear Example
Technical Analysis: A trader uses technical analysis to analyze the stock price of Company X. They notice a "head and shoulders" pattern on the stock chart, which is typically a bearish signal. This pattern, combined with other technical indicators like the Relative Strength Index (RSI) showing overbought conditions, prompts the trader to sell Company X's stock in the short term.
Fundamental Analysis: An investor conducts fundamental analysis on Company Y, a manufacturing company. They examine the company's financial statements, including its income statement and balance sheet, and compare them to industry averages.
Additionally, they assess the company's growth potential based on its market position, product innovation, and management team.
