FxWirePro: EUR/CHF delta risk reversal indicates uptrend to persist but signifies costlier downward hedging in long term

Observe how prices were rallied last when we've shown delta risk reversal of EURCHF ATM contracts, it was comparatively lower side over next 6 months tenor and it suggested that hedging downside risks would be more expensive as the premiums of puts have been comparatively costlier with calls.

But since delta risk reversal for 1W timeframe was zero, that was the time when prices stated rising. Thus, by this reasoning it is understood that derivative contracts have suggested sentiments for upcoming trend.

The negative delta risk reversal persists over next one year divulges that the expectation of weakness in next future. So we think the premiums on put options would be highly costlier regardless of swings in short run, on speculating grounds one can get benefitted from such situations by buying one touch binary vega calls on every dips to operate as a swings trading in order to extract leverage on extended profits.

More importantly, it is also observed that the pair is perceived to have 3rd least ATM volatility among the major pool, we can observe these effects in weekly charts as the momentum is remained well within the Bollinger bands despite bearish various candles piling up. For intraday trading it is advisable to buy binary calls on dips for targets of 15-20 pips but remember any time trend reversal may occur as we already saw downside hedging interest has been costlier.