For a foreign exchange trader, fundamental analysis is focused on the macroeconomics of the particular currencies involved, including the implications of the current account, the GDP growth rate, domestic consumption, domestic production and other political factors that influence the currency's relative value. As we move into more company-specific investments such as individual equities, fundamental analysis becomes more preoccupied with microeconomic questions related to the firm. Technical analysis is an art in which quasi-statistical techniques and formal statistics are used to determine the existence and strength of trends in financial time series and to identify turning points in these trends. If you can do this with a reasonable degree of accuracy, then you can improve your chances of making a profitable trade. Technical analysis is important in the structuring of derivative products because of the leverage involved and because of the inclusion of such features as barriers and compound strikes.
Timing is everything.
There are two kinds of technical analysis. An indicator is a function of the time series and some parameters that the analyst chooses. There is a growing voice in technical analysis that argues against this second school of thought. The argument against interpolating lines and patterns comes from a basic assumption about the psychology of money. In order for technical analysis to be successful in forecasting future price movements, the analysis must be objective.