Quote:
Originally Posted by pipdiddy
COT data is one of most used tools for gauging forex market sentiment. We wrote about a lesson in our school, http://www.babypips.com/school/getti...ith_forex.html
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You can also use the Dollar Index (USDX) and look for divergences against the majors. For example, if EUR/USD (inverted), GBP/USD (inverted), USD/JPY or USD/CHF is rising and USDX isn't, it's a good early warning signal of a possible reversal. |
I agree that COT information is useful to see where people are putting their thinking to work. You can generally get the information directly from the exchange website, thought it's not real pretty.
I'm going to disagree a bit on the USDX divergence thing, though. If one currency pair, such as USD/JPY is rising, but the index isn't that could just be something specific to the JPY. I'd look at the JPY cross rates (EUR/JPY, GBP/JPY, etc) to see.