Just using made up numbers here, if 97% of the money that changes hands in the forex markets each day is not changing hands by traders, but just normal day-to-day money flows (banks adjusting their balance sheets, people taking vacations and converting money, etc), then it would seem to me all this technical analysis in the forex market is mumbo jumbo. However, if a big chunk of the money flows are indeed to traders playing the markets, the technical analysis could have some merit. What do we think the facts are in this regard?
Retail traders volume in the Forex, stock and commodity markets is very small indeed (compared to central banks, mutual and hedge funds, big corporations, etc...), so what? How does it "invalidate" technical analysis in any way?
Technical analysis is mumbo jumbo regardless of market participants. Technical analysis is just you projecting your pareidolia onto an arbitrary price chart.
In order to understand and evaluate the effectiveness of technical analysis, can you study its benefits?
A lot of TA is cleverly devised but either unnecessary for trading or even worse misused by traders. At the basic level the simplest TA feature is a trend. Once in a trend, the most likely thing price will do next is continue the trend. This is so in forex as it is everywhere else in all markets. Which is not to say that the trend causes the trend - but if this is all you know and trust in trading you have a money-making opportunity.
I really like this question for different reasons. I think real need for currency exchange is in the 10-20% and rest is gambling (?) of the day traders. This question can probably be answered IF there is a way to know the full volume of Forex traded each day and exactly by who. I also think this data is very helpful in making wise trades.