When we analyze a company, we use fundamental analysis. When we analyze a stock, we use technical analysis.

A “trader” is more likely to use technical analysis because it is known to more accurately assist in predicting the shorter-term moves of a stock.

A longer-term “investor” is more likely to use fundamental analysis because it gives a clearer picture of the longer-term potential of the underlying company behind the ticker symbols of a stock.

It can be inferred from the definitions of Technical Analysis that it is laid on the assumption that ‘history repeats itself’.  But, if a certain pattern of activity has, in the past, produced certain results nine out of ten, one can assume a strong likelihood of the same outcome whenever this pattern appears in the future.  It should be emphasized, however, that a large part of the methodology of Technical analysis lacks a strictly logical explanation.

Thus we can say that Fundamental Analysis is more future looking with due consideration to future earnings and dividends where as Technical analysis is backwards looking with considerations to past data.  Technical analysis considers past data as more significant than information on future prospects.  This is because whatever the fundamental reason for a change in stock price, if the stock price responds slowly enough, the analyst will be able to identify the trend that can be exploited during the adjustment period.  The key to successful analysis is a sluggish response of stock price to fundamental supply and demand factors.

That is why a technical analyst usually attempts to predict short term price movements and thus makes recommendations concerning the timely purchases and sales of securities.

Besides the above fundamental difference between technical and fundamental analysis there are other differences between the two analyses which are presented hence:

1. Unlike fundamental analysis, Technical analysis estimates prices instead of values.
2. Technical analysis ignores the facts of fundamental analysis such as risks, earnings, dividends, growth rates, etc.
3. Some analyst use both the techniques but think of Technical analysis to be superior to fundamental analysis because, Technical analysis is easier, faster and can be simultaneously applied to more stocks than fundamental analysis can be.
4. Many technical analysts would say that fundamental analysis is not worthless, but it is bit too troublesome.  But faulty or manipulated income statement cannot give an accurate estimate of value, and should wait for price increase of under priced securities.

Both forms of analysis are the study of trends, and they are only as good as the individual who is interpreting them.