One other great resource that is available to all retail traders is the COT report.
This is released by the Commodity futures trading Commission each Friday and it simply measures the net long and net short positions of the large institutional traders on the futures market.
This can be useful to longer term traders who are looking to position themselves for a large move on a currency because it gives an insight into where the large traders are placing their money and also which direction they are biased towards.
The information is pretty straight forward but the main items you want to be taking notice of are the positions and biases of the Non commercial traders because these are the guys who are speculating for profit and thus have the greatest interest in the way the market is trading.
So when you read the information you should be looking closely at the net longs and shorts of these non commercial traders to try and identify obvious differences in the two positions.
For example, you may notice that the traders are net long and have been for some weeks or maybe even months but the gap between the longs and shorts is reducing each week, this could mean that the bias long is coming to an end and traders are unwinding their positions in expectation of a move to the downside.
One other example of how you could use the information is to look for extremes in bias. For example you may notice that there is heavy bias towards long positions, if this is the case it is less likely that there are many more traders left to continue that trend so a reversal could be occurring quite soon as short traders look to sell an expensive currency.
Or you could combine the two tactics to provide you with a nice potential trend reversal indicator.
Next: Putting it All Together