Support for Resistance: Technical Analysis and Intraday Exchange Rates

[...]Early in the morning of each business day, the major foreignexchange trading firms send their customers lists oftechnical trading signals for that day. Timely technical signalsare also supplied by major real-time information providers.These signals, which are based primarily on prior price andvolume movements, are widely used by active foreign exchangemarket participants for speculation and for timing theirnonspeculative currency transactions. In fact, 25 to 30 percentof foreign exchange traders base most of their trades ontechnical trading signals (Cheung and Chinn 1999; Cheungand Wong 1999). More broadly, technical analysis is used aseither a primary or secondary source of trading information bymore than 90 percent of foreign exchange market participantsin London (Allen and Taylor 1992) and Hong Kong (Lui andMole 1998).[...]