Forex Sentiment Indexes Cheat Sheet

Your complete reference guide for mastering market sentiment with COT reports, Fear & Greed Index, VIX, and other key indicators that reveal what the crowd is thinking.

📊 Updated Weekly • ⚡ Quick Reference • 🎯 Actionable Strategies

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COT Report

Commitment of Traders data

Weekly

Released Fridays at 3:30 PM EST

Fear & Greed

Market emotion indicator

0-100

Daily updates after market close

VIX Index

Volatility & fear gauge

Live

Real-time during market hours

Sentiment Tools

Multiple indicators

Real-time

Comprehensive market view

COT Report (Commitment of Traders)

📘 What is the COT Report?

The Commitment of Traders (COT) report is published weekly by the CFTC, showing the positioning of different trader categories in futures markets. It reveals who is buying and selling, helping traders identify potential market turning points.

Trader Category	Description	Market Impact	Trading Signal
Commercial Hedgers	Banks, corporations, institutions	🟢 Smart money, contrarian indicator	Follow their net positioning closely
Large Speculators	Hedge funds, asset managers	🟡 Trend followers, momentum traders	Watch for extremes as reversal signals
Small Speculators	Retail traders, small funds	🔴 Often wrong at market extremes	Fade extreme positions (contrarian)
Non-Reportable	Small positions under reporting threshold	⚪ Minimal individual impact	Background noise, low significance

📈 Bullish COT Signals

• Commercial Hedgers: Building large long positions
• Large Specs: Reducing short positions or flipping long
• Small Specs: Heavily short (contrarian signal)
• Net Positioning: Smart money vs retail divergence
• Weekly Changes: Consistent commercial accumulation
• Historical Context: Near multi-year extremes in positioning

📉 Bearish COT Signals

• Commercial Hedgers: Building large short positions
• Large Specs: Reducing long positions or flipping short
• Small Specs: Heavily long (contrarian signal)
• Net Positioning: Retail euphoria at market tops
• Weekly Changes: Smart money distribution phase
• Historical Context: Overbought positioning levels

💡 Pro Trading Tips

• COT data is 3 days delayed - combine with real-time price action
• Look for divergences between price and positioning
• Best signals occur at positioning extremes (2+ year highs/lows)
• Commercial hedgers are right 70-80% of the time at extremes

Fear & Greed Index

📘 What is the Fear & Greed Index?

Created by CNN Money, this index measures investor sentiment on a scale of 0-100. It combines seven market indicators to determine whether investors are being too fearful (potential buying opportunity) or too greedy (potential market top).

Current Reading Example

Neutral (45)

Neither extreme fear nor greed

Best for trend-following strategies

😰 Extreme Fear (0-25)

• Market Behavior: Panic selling, oversold conditions

• Opportunities: Contrarian buying opportunities

• Risk Level: High volatility, falling knives

• Strategy: Wait for reversal confirmation signals

• Timeframe: Position for 2-4 week rebounds

⚠️ Warning: Markets can stay fearful longer than expected. Don't catch falling knives.

🤑 Extreme Greed (75-100)

• Market Behavior: FOMO, overbought conditions

• Opportunities: Take profits, reduce position sizes

• Risk Level: Bubble territory, correction imminent

• Strategy: Prepare for mean reversion

• Timeframe: Expect pullbacks within 1-3 weeks

💡 Remember: Markets can stay greedy during strong bull trends. Respect momentum.

Fear & Greed Scale Breakdown

0-24

Extreme Fear

Strong buy signals, peak pessimism

25-44

Fear

Caution warranted, watch for bounces

45-55

Neutral

Balanced market, follow trends

56-74

Greed

Euphoria building, take some profits

75-100

Extreme Greed

Strong sell signals, peak optimism

Fear & Greed Index Components (7 Indicators)

Component	Weight	What It Measures	Significance
Stock Price Momentum	14.3%	S&P 500 vs 125-day moving average	Market direction strength and persistence
Stock Price Strength	14.3%	NYSE stocks hitting 52-week highs vs lows	Breadth of market participation
Stock Price Breadth	14.3%	NYSE advancing vs declining volume	Quality of market movements
Put/Call Options	14.3%	Put vs call option volume ratio	Investor hedging and speculation
Market Volatility (VIX)	14.3%	VIX vs 50-day moving average	Fear and uncertainty levels
Safe Haven Demand	14.3%	Stock returns vs bond returns	Flight to safety behavior
Junk Bond Demand	14.3%	High-yield vs investment-grade spreads	Risk appetite in debt markets

VIX (Volatility Index)

📘 What is the VIX?

The VIX (CBOE Volatility Index), nicknamed the "Fear Index," measures expected volatility in the S&P 500 over the next 30 days. It's calculated from S&P 500 index options prices and represents market expectations of near-term volatility.

Low VIX

0-15

Complacency

Calm markets, low fear

⚠️ Often precedes volatility spike

Normal VIX

15-25

Balanced

Moderate uncertainty

✅ Ideal for trend trading

High VIX

25-35

Elevated Fear

Market stress increasing

⚡ Reduce position sizes

Extreme VIX

35+

Panic

Crisis or crash mode

🎯 Contrarian opportunities

🎯 VIX Trading Strategies

• VIX Below 12: Extreme complacency - expect volatility spike within 2-4 weeks
• VIX 12-20: Normal range - trend-following strategies optimal
• VIX 20-30: Increased caution - use tighter stops, smaller positions
• VIX 30-40: High fear - wait for stabilization before entering
• VIX Above 40: Extreme panic - often marks short-term bottoms
• VIX Spikes (+20% in day): Usually exhaustion moves, reversal likely

📊 VIX & Forex Correlation

• High VIX → USD Strength: Safe haven demand increases
• High VIX → JPY Strength: Classic risk-off currency
• High VIX → CHF Strength: Another safe haven beneficiary
• High VIX → AUD/NZD/CAD Weak: Commodity currencies suffer
• Low VIX → Risk Currencies: EM and commodity FX outperform
• VIX Divergence: Watch when forex doesn't follow VIX - signals trend exhaustion

VIX Historical Levels & Events

Event	Peak VIX	Market Impact	Recovery Time
COVID-19 Crash (2020)	82.69	S&P 500 -34%	5 months to new highs
Financial Crisis (2008)	80.86	S&P 500 -57%	4 years to new highs
Brexit Vote (2016)	25.76	S&P 500 -5%	2 weeks
Normal Bull Market	12-20	Steady gains	N/A

Other Key Sentiment Indicators

💵 Dollar Index (DXY)

Above 110: Extreme USD strength, major risk-off

105-110: Strong USD, defensive positioning

95-105: Normal range, balanced sentiment

90-95: Weak USD, risk-on environment

Below 90: Very weak USD, EM currency strength

Correlation: Inverse to EUR/USD, GBP/USD

Key Levels: 90, 95, 100, 105, 110, 115

🥇 Gold (XAU/USD)

Rising Gold: Risk-off sentiment, USD weakness

Falling Gold: Risk-on sentiment, USD strength

Gold + USD Both Rising: Global crisis fears

Gold + USD Both Falling: Strong risk appetite

Correlation: Typically negative with USD

Watch For: Safe haven flows during crises

Key Levels: 1700, 1800, 1900, 2000, 2100

📈 10Y Treasury Yield

Rising Yields: USD bullish, risk-on sentiment

Falling Yields: USD bearish, risk-off sentiment

Above 4%: Strong economic growth expectations

Below 2%: Recession fears, flight to safety

Correlation: Positive with USD strength

Watch For: Fed policy pivot signals

Key Levels: 1.5%, 2%, 3%, 4%, 5%

🔄 Put/Call Ratio

Above 1.0: More puts than calls - bearish sentiment (contrarian buy)

0.7-1.0: Normal range - balanced market

Below 0.7: More calls than puts - bullish sentiment (contrarian sell)

Extreme High (1.5+): Panic - strong buy signal

Extreme Low (0.4-): Euphoria - strong sell signal

💡 Tip: This is a contrarian indicator - fade the extremes

📊 AAII Sentiment Survey

Bulls Above 50%: Excessive optimism - caution warranted

Bulls 30-50%: Normal range - neutral sentiment

Bulls Below 30%: Excessive pessimism - buy signal

Bears Above 40%: Panic levels - contrarian buy

Bears Below 20%: Complacency - contrarian sell

💡 Released: Every Thursday evening

📅 Sentiment Data Release Schedule

Indicator	Release Schedule	Time (EST)	Market Impact	Best Use
COT Report	Every Friday	3:30 PM	🟡 Medium-term (weeks)	Weekly trend analysis & positioning
Fear & Greed Index	Daily updates	After market close	🟢 Short-term (days)	Daily sentiment check & extremes
VIX	Real-time	9:30 AM - 4:00 PM	🔴 Immediate (minutes)	Intraday volatility & risk assessment
Put/Call Ratio	Daily	After market close	🟡 Medium-term (days)	Contrarian signals at extremes
AAII Sentiment	Every Thursday	Evening	🟡 Medium-term (weeks)	Retail sentiment gauge
DXY / Gold / Yields	Real-time	24/5 trading	🔴 Immediate	Risk-on/risk-off confirmation

🎯 Sentiment Trading Rules & Best Practices

✅ Do's

• Combine Multiple Indicators: Never rely on a single sentiment indicator. Use 3-4 together for confirmation.
• Confirm with Price Action: Sentiment signals must align with chart patterns, support/resistance, and candlestick formations.
• Focus on Extremes: Sentiment is most useful at peaks of fear (buy) or greed (sell). Neutral readings are less actionable.
• Understand Context: A VIX of 30 during a bull market is different from VIX 30 during a recession.
• Watch for Divergences: When price moves opposite to sentiment, major trend changes often follow.
• Use Timeframe Alignment: Match indicator timeframe to your trading style (COT for swing, VIX for intraday).
• Track Historical Levels: Compare current readings to past extremes for better perspective.

❌ Don'ts

• Don't Trade in Isolation: Never enter trades based solely on sentiment without confirming price action.
• Don't Fight Strong Trends: Don't blindly go against momentum, even at extreme sentiment. Wait for reversal confirmation.
• Don't Ignore Fundamentals: Major news (Fed decisions, geopolitics) can override sentiment signals.
• Don't Use for Scalping: Sentiment indicators are macro tools, not suitable for 5-minute trades.
• Don't Overcomplicate: Stick to 3-5 key indicators. More is not better - clarity is better.
• Don't Forget Risk Management: Sentiment signals can be early. Always use stop losses.
• Don't Chase Reversals: Let extreme sentiment stabilize before entering. Patience pays.

🎓 Practical Application: Step-by-Step Trading Process

Check Macro Sentiment

✓ VIX level (fear gauge)
✓ Fear & Greed Index
✓ DXY, Gold, Yields
✓ Determine risk-on or risk-off

Analyze Positioning

✓ COT Report data
✓ Commercial vs Speculator positions
✓ Put/Call ratio
✓ Identify crowded trades

Confirm & Execute

✓ Price action confirmation
✓ Support/resistance levels
✓ Set proper stop loss
✓ Size position appropriately

🔥 High-Probability Sentiment Combinations

📈 Strong Bullish Setup

Sentiment Indicators:

• Fear & Greed Index: 0-25 (Extreme Fear)

• VIX: Above 35 with declining momentum

• Put/Call Ratio: Above 1.2

• COT: Commercials heavily long, specs heavily short

Confirming Signals:

• Price at major support level

• Bullish divergence on RSI/MACD

• Hammer or bullish engulfing candle

• Gold falling, USD weakening

Action Plan:

• Enter long after confirmation candle

• Stop below recent low

• Target: 2-3x risk/reward ratio

• Hold until sentiment normalizes (45-55)

📉 Strong Bearish Setup

Sentiment Indicators:

• Fear & Greed Index: 75-100 (Extreme Greed)

• VIX: Below 15 with rising momentum

• Put/Call Ratio: Below 0.6

• COT: Commercials heavily short, specs heavily long

Confirming Signals:

• Price at major resistance level

• Bearish divergence on RSI/MACD

• Shooting star or bearish engulfing candle

• Gold rising, USD strengthening

Action Plan:

• Enter short after confirmation candle

• Stop above recent high