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Sentiment

Using CoT Data to Spot Reversals

FF
Research Team
|Jan 18, 2026|12 min read

How to identify when a trade is 'overcrowded' using the weekly Commitments of Traders report.

The Commitments of Traders (CoT) report, released every Friday by the CFTC, is one of the few true windows into institutional positioning. It separates reportable positions into categories, with "Non-Commercials" (Speculators/Hedge Funds) and "Commercials" (Hedgers) being the most critical.

The "Overcrowded" Signal

Trends often reverse when everyone is already on board. If 80% or more of speculators are Long EUR/USD, there is simply no one left to buy. This is an "overcrowded trade."

The Flip Setup

Look for extreme positioning (e.g., Net Longs at 52-week highs) combined with price action failure. If price makes a new high but fails to close above it while positioning is stretched, a sharp liquidation break is often imminent.

Put these concepts into practice.

See how fundamental data shapes currency bias with real-time economic indicators and sentiment analysis.