Whenever you analyze a share to buy and sell the same, you look at two aspects: One is technical analysis and the other is fundamental analysis.
Take a look at the difference between fundamental and technical analysis
Technical analysis is generally relied by a trader, though, it may may strictly not always be the case. Traders look at charts, price movement and predict whether a share would go up or down. A fundamental analyst on the other hand relies on financial data. He takes a look at key parameters including EPS, P/E, price to book value etc.
|Technical Analysis||Fundamental Analysis|
|Generally charts and other technical analysis tools are used.||Uses more of figures, including balance sheet analysis.|
|Involves MACD and other complex charts, which generally focuses on prices.||The main focus is on key ratios and fundamentals parameters like EPS, P/E, book value, price to book value etc.|
|Generally used by traders.||Mostly used by long term investors.|
|Buying based on technical analysis will largely be short term.||Generally is more of a long term strategy.|
The basic input that a technical analyst would reply on is the share price. A fundamental analyst would largely concern himself with facts and figures, particularly from the profit and loss and balance sheet.
Fundamental analysis can be more time consuming, as one has to read the entire P&L, and investors may need to analyze industry prospects etc.
Which is better to rely on technical or fundamental analysis?
Generally speaking long term investors may not be concerned with temporary share price movements. Hence, for them fundamental analysis is of greater significance. For traders, their interest is just short term, hence they would not be concerned with analyzing the balance sheet.
In any case, you can reply on both the tools, if you have the knowledge.