When it comes to trading CFDs, most beginners gravitate toward either technical analysis or fundamental analysis.
But what if you didn’t have to choose? In fact, the most successful traders often use both types of analysis together to get a more complete view of the market.
In this guide, we’ll explore how combining technical and fundamental analysis can help South African traders make smarter decisions, time trades more effectively, and manage risk with greater confidence.
The Difference Between Technical and Fundamental Analysis
Before we look at how to combine the two, it’s important to understand what each approach offers:
Technical Analysis
- Focuses on price charts, patterns, and indicators.
- Used to time entries and exits based on market behavior.
- Helps identify trends, support/resistance, and momentum.
Fundamental Analysis
- Focuses on economic data, news, earnings, and geopolitical events.
- Used to understand why a market might move and the long-term value of an asset.
- Often applied to stocks, forex pairs, and indices.
In short:
- Technical analysis answers “when?”
- Fundamental analysis answers “why?”
Why Combine Technical and Fundamental Analysis?
Using both types of analysis gives traders an advantage by merging the context of fundamental drivers with the precision of technical setups.
Benefits of combining both:
- Better timing: Use technicals to time trades around known economic events.
- Stronger signals: Confirm a technical setup with supportive fundamentals.
- Risk reduction: Avoid surprises by understanding macroeconomic news.
- Market context: See the bigger picture while executing with precision.
For South African CFD traders, this combination is especially useful when trading:
- Forex (USD/ZAR, EUR/USD) – impacted by both economic data and technical levels.
- Indices (like JSE Top 40) – influenced by global market sentiment and local news.
- Stocks – where earnings reports (fundamentals) align with chart patterns (technicals).
How to Combine Both in Practice
Here’s a simple, step-by-step process:
1. Start with the Fundamental View
Begin by checking key economic drivers, news, or events:
- For forex: interest rate decisions, inflation data, GDP releases.
- For stocks: earnings reports, mergers, or sector news.
- For commodities: geopolitical tensions, supply/demand forecasts.
Example:
If South Africa’s interest rate is expected to rise, this might strengthen the ZAR, which supports a short position on USD/ZAR.
2. Use Technicals to Refine the Trade
Once the fundamental bias is established, use charts to:
- Identify entry points
- Spot support and resistance levels
- Confirm the trend with moving averages or RSI/MACD
- Set precise stop-loss and take-profit levels
Example:
After deciding to go short on USD/ZAR, you wait for a bearish breakout or trendline retest before entering the trade.
3. Align Timeframes
- Fundamentals often affect medium to long-term market direction.
- Technicals work best for short-term entries and exits.
Make sure your strategy aligns both:
- Use daily charts for fundamental direction.
- Use 1-hour or 4-hour charts for technical setups.
Tools You’ll Need
To effectively combine both types of analysis:
- Economic calendars (e.g., Investing.com or your broker’s platform)
- Trading platforms like MetaTrader 4/5 with charting tools
- Access to news feeds and market reports
- A trading journal to track both fundamental events and technical entries
Solis Markets Hub offers curated broker reviews and tools that support both analysis methods.
Common Pitfalls to Avoid
- Ignoring one side: Relying only on charts without understanding market news can lead to surprises.
- Overcomplicating setups: Too many indicators or conflicting data can lead to indecision.
- Reacting emotionally to news: Let the market confirm your bias before entering trades.
- Forcing trades before major events: Always factor in volatility risks during announcements.
Example Scenario: Forex Trading
Let’s say:
- You’re trading USD/ZAR.
- South African Reserve Bank announces a rate hike (ZAR bullish).
- Fundamentals suggest USD/ZAR may fall.
You check the chart:
- USD/ZAR is forming a descending triangle near resistance.
- RSI confirms bearish momentum.
Trade Plan:
- Sell if price breaks below support.
- Stop-loss above the resistance line.
- Take-profit at next support zone.
This is a textbook example of aligning fundamental context with technical timing.
Final Thoughts
CFD traders in South Africa don’t have to choose between technical and fundamental analysis—they’re strongest when used together.
Fundamentals provide context, while technicals offer execution.
By combining both, you gain a fuller picture of the market and increase your chances of making informed, profitable trades.
Whether you’re trading forex, stocks, or indices, building a strategy around both approaches is one of the most effective ways to level up your trading.Looking for platforms, tools, or brokers that support this style of trading? Visit Solis Markets Hub for reviews, guides, and trading insights tailored to the South African market.
