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I am trying to create a Report Data Source to connect a traditional relational database for reporting. The connection is successful but when I try to create a Power View report, it gives me an error

"The current action cannot be completed. The data extension type for data source 'http://myserver/Shared Documents/AdventureWorksDW.rsds' is not valid for this operation."

My query is, whether it is possible to create a power view erport connecting to a relational database rather than an analysis server database? if yes, what mistake am I making?

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You need to create a tabular data model or Multi-dimensional model/Cube [SQL 2012 CTP Edition only] from your relational database and deploy it to an analysis server instance.

As clearly mentioned in technet documentation

Power View is a thin web client that launches right in the browser from a data model in SharePoint Server 2010. The model can be a PowerPivot model workbook or a tabular model running on a SQL Server 2012 Analysis Services (SSAS) server.

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