The original title of this article was Fundamental vs. Technical analysis. This would have been a fallacy. Fundamental analysis is not in competition with technical analysis. They compliment each other. In order to be an effective trader on the Forex market a trader must consider both fundamental and technical principles.

Fundamental Analysis uses economic, political, and social circumstances. These forces affect the supply and demand.

There are 4 major forces that cause changes:

Unemployment
Increase=Lower prices
Decrease=Higher Prices

Gross Domestic Product (GDP)
Increase=Higher prices
Decrease=Lower Prices

Balance of Trade Deficit
Increase=Lower prices
Decrease=Higher Prices

Interest Rates
Increase=Higher Prices
Decrease=Lower Prices

Economists keep track of these forces using economic calendars. Economic calendars keep track of announcements and market moving events.