There are two types of financial analysis:
technical analysis and fundamental analysis. Technical analysis looks at
quantitative charts, such as moving averages, while fundamental analysis uses
ratios, such as a company's earnings per share (EPS).
For example, technical analysis was
conducted on the GBP/USD exchange rate after the results of the Brexit vote in
June 2016. Looking at the exchange rate chart, it was determined that the rate
dropped significantly after the vote on June 23, 2016, and then it recovered
over a 48-hour period by 375 basis points (bps).
As an example of fundamental analysis,
Discover Financial Services reported first-quarter 2016 results on July 19,
2016. The company had an EPS of $1.40, up from an EPS of $1.33 for the same
quarter in 2015, which was a good sign.
Done by Yue Yang
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