In short
- Fundamental analysis studies the company and its value.
- Technical analysis studies past prices and volumes.
- Neither guarantees what the price will do.
The two approaches side by side
| Fundamental | Technical | |
|---|---|---|
| Question | What is the company worth? | How has the price moved? |
| Data | Results, debt, sector, governance | Prices, volumes, averages |
| Tools | P/E ratio, margins, cash flow | Charts, support, resistance |
| Limit | Uncertain forecasts | The past does not predict the future |
Fundamental analysis
It tries to estimate whether a share’s price fits the company’s results and outlook. The analyst reads the accounts and compares the company with its sector. They may use the P/E ratio or the details of the results.
Its limit: its conclusions depend on assumptions about the future. The market can also disagree with an estimate for a long time.
Technical analysis
It looks at charts. Here are some commonly used words:
- Trend: the general direction of prices over a period.
- Support: a price area where falls have already stopped.
- Resistance: a price area where rises have already stopped.
- Moving average: the average of recent prices, recalculated each day.
Example: the 3-day moving average of prices at 100, 102 and 104 dirhams is 102 dirhams. Its limit: these markers describe the past, and the same chart can be read in several ways.
Common mistakes
- Taking an opinion or price target as a certainty.
- Forgetting that fees weigh on frequent trades.
- Reading signals on an illiquid stock, where a few orders can distort the price.
- Looking only for what confirms a first idea.
This guide presents two methods. It recommends neither and gives no buy or sell signal.
Frequently asked questions
Which one is the best?
Neither wins for certain. They do not answer the same question, and both can be wrong.
What is a price target?
It is the price an analyst thinks possible by a certain date. It is an opinion, not a promise.
This article is for information and educational purposes only. It is not investment advice or a recommendation to buy or sell any security. Investing in shares involves a risk of capital loss. Check figures against official sources (Casablanca Stock Exchange, AMMC) and consult a licensed professional. Read the full disclaimer.
