Because the COT report is published weekly, it would be more suitable for longer term traders to use as a marketsentiment indicator. So, how do we do that? Well, besides using the changes in open interest and changes in the numberof long and short contracts as a volume indicator, my favorite way to use the COT report is to find extreme net long andnet short positions. This can be great indicator that a market reversal is around the corner because if everyone is long acurrency, who is left to buy? No one. And if everyone is short a currency, who is left to sell? Again, no one. The onlything a market can do is go the other direction. Here’s a chart example: This is an example chart of the US DollarIndex from freecotcharts.com. In the top half of the chart we have the price action of the USD index futures with each barrepresenting weekly data. On the bottom half of the chart we have data on the net long/short positions broken down intothree categories: Commercial (Blue), Large Non-commercial (Green), and Small Non-commercial (Red). We will payattention to the Large Non-commercial positions since commercial positions are for hedging and small retail tradersaren’t really a factor.Let’s examine this chart and see what it can tell us.