FxWirePro: Momentum oscillators and delta risk reversal shows their impact – back with backspreads

"Never rely on single indicator is our fundamental" as legendary saying by Warren Buffet goes this way "Never test depth of the river with both the legs."

It would be more efficient to devise a call when we synthesize our trend analysis, momentum and targets with 2 or multiple indications, be it technical or fundamental or both. Such has been the case below is the lively instances.

We would now like to advocate put ratio back spreads on hedging grounds as we could foresee the sentiments for downside hedging are more expensive and intensifying. From the nutshell, 25-delta risk of reversals of EUR/CHF indicates highly negative which would mean that more interests seen for this pair to be hedged for downside risks. Since it shows the highest negative values, what we could infer from this is that it indicates puts are more expensive than calls (downside protection is relatively more expensive).

ATM volatility: While IV is also perceived to be least among major currency ATM pools in the OTC market. So the active traders can speculate prices freely in until next 6 months timeframe. Lower volatility is good for bulls because if any abrupt disruption arises in EURCHF then the low IV implies the market thinks the price will not dip much.

On weekly charts the same momentum indicators are now signaling sell call, we see more down side potential back again because of which longs should be depleted and put ratio back spreads are to be deployed.