The forex market is decentralized and we can't obtain reliable information about the positions of the traders. How can we find out what the large market participants intend to do? Very practical way to do this is to analyze the the Commitments of Traders (COT) report. It was first published by the U.S. Commodity Futures Trading Commission (CFTC) in 1962, and covered 13 agricultural contracts. Its purpose was to provide information about the current situation of the futures markets. At the beginning, the data were presented once a month, but since 2000 the information is published weekly (at 3:30 p.m. Eastern time every Friday with data collected on the last Tuesday) on the Commission's website (http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm). Moreover, the scope of the report was expanded, and now it includes data on market positions in currency futures also. To understand the Commitments of Traders report you need to know the following concepts and terms:
On the chart below, you can see the correlation between EUR/USD and the net position of Non-commercials.