As a trader, I have relied on technical analysis more than 95% of the time! This is what has allowed me to compound my trading capital many times over the last few years as a self-directed trader!
What technical analysis measures is investor psychology, which is the real engine behind markets. When people are optimistic about the future of a given issue, they bid the price up. When they are pessimistic, they bid it down. Price movements in any liquid market (forex being the most liquid of all) reflect aggregate social mood about the markets.
There are two observations about financial market history:
First, studies of centuries of market data reveal that events external to the market seem to have no consistent effect on the market’s progress. The same news that today seems to drive the market up is just as likely to drive it down tomorrow. The only reasonable conclusion is that the markets simply do not react consistently to outside events.
Second, when you study historical charts, you see that markets are not random, i.e. there is a certain measure of predictability in price trends, because collective human psychology is patterned.
Once you understand these two points, you begin to realise that good technical analysis allows you to anticipate trends. The market has a life of its own and the best way to predict its direction is not to rely on news, but to objectively apply proven technical analysis rules.
Using news to forecast market direction is futile. Your goal is to predict the behavior of people. Good technical analysis measures trends in the behavior of market participants. Relying on news and public opinion makes you at least one step removed from reality.
Of course, even the best technical analysis method is an exercise in probability, because the market is not a machine to which a formula can apply perfectly. Nevertheless, a successful trader is one who is able to apply proven methods with a success rate of about 70%. In fact, some successful traders are very profitable even with a 60% success rate. The key is mastering the psychology of your trading, together with strict money management rules.