Sentiment Analysis in Forex: Who Is on the Other Side

By Uladzimir Leuchankou, founder of Signal2Forex · 7 November 2026, the day after the CFTC release

What is sentiment analysis in forex? The usual answer is a line from a broker page — the percentage of accounts that are long, the percentage that are short, and a rule that says to trade against the bigger side. I suppose that is an answer too.

But for me sentiment analysis forex traders can use is a wider thing — the habit of asking, before every trade, who is already in this market, how heavily, and who will be forced to leave first.

Sentiment analysis in forex trading is not one indicator. It is a set of position counts from different groups of people, each with its own source and its own delay. Most pages skip this, so I put the three groups I watch into one table before anything else.

Sentiment analysis forex: three layers

The first layer — the one with real money behind it — is the Commitments of Traders report from the CFTC, the US futures regulator. Every Friday at 15:30 Eastern time, that is 20:30 GMT in winter, it publishes how many euro, yen, pound and other currency futures contracts were held on the previous Tuesday by three groups: commercial hedgers, non-commercial speculators and small non-reportable accounts.

The non-commercial column is what people mean when they say forex trader sentiment at the institutional level.

On 27 October 2026 the CFTC also announced that this report will go from once to twice a week by the end of 2026. I wrote a separate page on reading the COT report, so here I keep to what it tells me about the crowd.

The second layer is forex client sentiment from brokers. IG publishes the share of its own clients long and short on each pair, and a few other brokers show similar numbers. This is retail sentiment forex in its purest form: thousands of small accounts, many of them on 1:30 or 1:500 leverage, counted by head and not by size.

I covered that feed in detail on the page about IG client sentiment. The main thing to remember is that a trader with 0.01 lot and a trader with 10 lots count the same there.

The third layer is softer — monthly surveys of fund managers, traders sentiment polls on forums, and news tone scored by software. Some forex sentiment analysis tools sell this as the best forex sentiment indicator. For me it is background. A survey comes out once a month, and a headline score tells me what the writers felt, not what anyone bought. I read it, I do not trade it.

The euro, six weeks of data

Here is how to use sentiment analysis in forex on a real pair, with the numbers from this week. On Tuesday 3 November 2026 the funds held 229,383 long euro contracts and 387,174 short, by the report the CFTC published on 6 November. Net, that is 157,791 contracts short.

One contract is EUR 125,000, so the net short is about EUR 19.7 billion — big for one group, about 18 per cent of the 876,122 contracts of open interest in the same market.

Six weeks earlier, on 22 September, the same group was 52,334 contracts short. The net short tripled.

And what did price do? The ECB reference rate for the dollar was 1.1463 on 22 September and 1.1179 on 3 November — a fall of 284 pips. On a standard lot that is $2,840 of movement, on a 0.01 cent-account lot it is $28.40. The crowd of large speculators added shorts every week except one, and the euro kept falling the whole time.

This is the example I keep in front of me when someone writes that an extreme reading means a reversal. The reading was already extreme on 13 October — 41 per cent of open interest on the short side. Three weeks later it was 44 per cent and the euro was lower still. I do not know when this run ends.

A reversal will come, and when it comes the squeeze of 387,000 short contracts will be sharp. But nothing in the sentiment data tells me the date.

Retail against the funds

Now the part of the report that people call retail. In the 20 October release the small non-reportable accounts held 85,764 euro contracts long and 56,135 short — net long 29,629. The funds on the same day were net short 134,524. Two groups, one contract, opposite sides.

The same split shows in the Australian dollar: funds short 127,292, small traders long 12,367. In the yen it flips — funds long 69,878, small traders almost flat at 1,209.

Why does the small side matter at all? The BIS counted $9.6 trillion of FX turnover per day in April 2025. Retail accounts are a rounding error inside that number — they cannot move EUR/USD by buying it.

What they can do is place their stops in the same obvious places. When many small accounts are long with stops 30 to 50 pips below, the market has a cluster of sell orders waiting under price. Big players know where it is.

This, and not some wisdom about crowds being wrong, is the reason client sentiment is worth a look before an entry.

Is retail sentiment forex data useful on its own? For me, no. The 20 October numbers show it. Small traders were long the euro, the usual contrarian rule said sell, and the euro did fall — but the funds were already short more than four times the retail size. The retail side was not the signal. It was the fuel.

What I do with the numbers

The robots in our Forex V Portfolio do not read a sentiment feed. They work from price on the H1 chart, with a spread filter and a time filter, and that is deliberate — a number that updates once a week, three days late, cannot drive an entry that lives for a few hours. I look at the COT by hand, on Saturday morning, with the week’s log of the robots next to it.

What I check is not the level. The first check — did the net position of the funds change direction this week, or did it just grow. The second — is open interest rising with it, which means new money, or falling, which means old money leaving. Those two questions take ten minutes and they tell me whether a pair is in a crowded trend or in a thinning one.

One more thing from the log. In the weeks when a pair is crowded the way the euro is now, the robots on that pair see wider spreads at the New York close and more slippage on exits. I have no proof that the two are linked. I only notice that they come together often enough that I keep an eye on the spread log on COT Fridays.

What is the signal, then? For me it is divergence between the two layers of the same report. If the funds start cutting shorts while small traders are still adding longs, the fuel is being pulled away from under a move that retail expects to continue. That is when I reduce size on that pair in the weeks ahead. It is a slow signal, measured in weeks, and it fits a swing or position horizon — not a scalper’s day.

Where the method breaks

So what is forex sentiment analysis good for, and where does it break? Three limits first, and I would not trust any page about forex sentiment indicators that skips them. The CFTC counts futures in Chicago, not the spot market in London where most of the turnover is, so the report shows one window into the market and not the whole room.

Broker sentiment counts heads, so one account with 50 lots and fifty accounts with 0.01 look the same. And every sentiment number is a snapshot: the COT is already three days old on the Friday it comes out, and by Monday the Tuesday picture can be gone.

There is also the mistake I see most. People read an extreme and trade against it the same day. The euro data above shows what happens — the extreme on 6 October became a bigger extreme on 13 October, and bigger again on 3 November. A crowded trade can stay crowded for a long time.

If you want to use sentiment analysis in forex at all, you need to wait for the crowd to start leaving, not for it to arrive.

Not everyone agrees with this. Many traders I have talked to use broker sentiment as a short-term fade on every pair, every day, and some say it works for them on M15 charts. I cannot check their results. What I can say is that in my own log, over the pairs the robots trade, the weekly change in positioning told me more than any single level ever did.

The next report comes out on Monday 16 November — the Friday slot is lost to the Veterans Day holiday — and covers positions as of Tuesday 10 November.

I will look at two numbers first: whether the funds’ euro short passed 160,000, and whether the small traders are still net long. If the first grows and the second shrinks, the trend has a few more weeks in it. If the first shrinks, the squeeze has started.

Data on this page: CFTC, Commitments of Traders, Chicago Mercantile Exchange, futures only, releases of 25 September to 6 November 2026, and CFTC press release 9316-26 of 27 October 2026; ECB euro reference exchange rates; BIS Triennial Survey 2025. Spread and slippage observations are from the live account streamed on our YouTube channel.