How to Use Technicals & Fundamentals Together
Why smart investors don’t choose between them — they combine both.
“Charts show the timing. Fundamentals show the reason. Together, they give you the edge.”
Why It’s a Mistake to Pick Just One
Some investors are die-hard fundamentalists.
Others swear by the chart and ignore the balance sheet.
But the truth? Each side is missing half the picture.
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Fundamentals help you identify quality businesses and long-term value
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Technicals help you navigate price action, sentiment, and entry/exit timing
When you combine both, you:
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Avoid buying strong companies at the wrong time
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Avoid trading setups in weak businesses with no staying power
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Add confidence to your decisions — both logical and tactical
What Fundamentals Tell You
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Revenue, profit, and cash flow trends
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Management quality and vision
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Competitive advantage and long-term potential
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Valuation (P/E, FCF, etc.) and margin of safety
These help you decide: Is this business worth owning?
What Technicals Tell You
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Where key support/resistance levels are
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Whether the stock is overbought or oversold
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How volume confirms (or contradicts) the move
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Short-term momentum and trader sentiment
These help you decide: Is now a smart time to act?
Simple Ways to Combine Both in Practice
1. Fundamentals First, Technicals Second
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Start with a watchlist of strong businesses
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Wait for the chart to align — a pullback to support, a breakout with volume, a moving average bounce
2. Chart First, Then Validate the Business
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If a chart looks great, check the story behind it
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Don’t buy a great pattern on a bad company
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A breakout is more powerful when the business is fundamentally improving
3. Use Technicals for Scaling In or Out
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Fundamentals might tell you to hold for years
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But charts can help you:
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Add on pullbacks
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Trim into strength
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Avoid buying into parabolic spikes
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Common Mistakes to Avoid
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Relying only on the chart without understanding the company
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Holding a company too long based only on fundamentals, even when price breaks down technically
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Using technicals to justify chasing hype or bad businesses
📚 Analogy: Think of fundamentals as picking the right road trip vehicle — and technicals as checking the traffic before you hit the gas.
Quote to Remember
“Fundamentals tell you what to buy. Technicals tell you when to buy it. Both matter.”
Read Next:
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The Smart Way to Trade Reversals
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This article was written by Itai Levitan at www.forexlive.com.