The age old debate: fundamental analysis vs technical analysis

It will be no surprise to regular readers that I do not trade heavily based on technical analysis but I do use it on occasion to back up a view especially if I’m looking for a longer term play. Although looking at M1’s and RSI’s can also add confo to a short term scalp too.

I do trade from support/resistance levels and that invariably means pivots too, and the bank orderboards that we post here will be influenced by those as well as more complex technicals.

A former colleague of mine at UBS, and still a good friend, is a well respected chartist and never has a dealing price page open on his screens except when he chooses to deal. He has no interest in knowing what data is coming out or what geo-political factors may be in play.

He is adamant that he will deal only when his charts confirm it. We have skype-traded together on many occasions to mutual benefit, but yes it’s usually him warning me off a short term trade as he sees no substance to it. Sometimes I listen, sometimes I don’t!

He was not a price maker in our interbank day but a highly regarded corporate salesman who gave valuable insight to our client base from his charting as well as from intra-day feedback from the spot or forward desks.

In my CS days I was asked every morning for my CHF highs and lows from the previous day by our rapidly expanding chart team that spawned many now pre-eminent analysts. They then returned with a two page report highlighting what I had already told them ! Mind you that was in the 90s when data capture for them was far harder to come by.

And I remain ambivalent sometimes , although hopefully never jurassic, about the effectiveness and subsequent power of decisions made purely on technical analysis.

People ( some of them undoubted bandits ) can teach t/a and make fortunes from doing so while leaving their students less than prepared to take on the mighty, yet fickle, world of forex. I can’t so easily teach people the 35 years of experience that makes me have a ” gut ” feeling just by watching a price action and/or weighing up fundamentals.

And I guess that’s what adds to my curiousity/frustration sometimes.

I’d love to hear your views.