Basic difference between fundamental and technical analysis:
1) Fundamental analysis uses revenues, earnings, future growth, return on equity, profit margins, and other data to determine a company's underlying value and potential for future growth. Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts.
2)Fundamental analyst would sell shares when the market value of shares is above the intrinsic value and make profit whereas a technical analyst believes that prices are just random movements and cannot be predicted.
3) Fundamental analyst (FA) believe that if a stocks has value, the price will eventually gravitate towards the value. When FA sees value in a stocks they are also willing to go contrary to the market trend and buy or sell the stock. For a Technical analyst (TA) trend is the friend and it is trends and patterns that matter.
4) Fundamentals work best when the view is long term. FA seek to predict the value of the stock on assumption that market price will eventually converge to the intrinsic value. Technicals work well when the view is of a very short-term: In short-term, patterns identified by technical analysis are likely to work much better. At the shorter end it is the trends and signals that matter and these are best captured in technical charts.
5) Decision making process is quite different: FA is laborious, it entails careful study of financial statements, demand forecast, and quality of management, earnings and growth. TA believes that decisions are taken by listening to what the market has to say.