USD/CHF has been trading inside a range for the past few days but it appears that the pair is already hinting at further losses. A downside break took place after the latest FOMC interest rate decision, as the US central bank downgraded 2014 GDP forecasts and reiterated its plan to keep rates low for a considerable time.
Stochastic has already reached the oversold zone though, indicating that dollar bears are exhausted. A quick bounce to the bottom of the range might take place before the pair chalks up more losses. However, this could be also a sign that the move lower was a false break and that USD/CHF might have a chance to test the range resistance above .9000.
Shorting at the previous lows or at the .8950 area would catch the momentum of an actual downside break and a more prolonged selloff. Aiming for the previous lows at .8900 with a 25-pip stop could yield a 2:1 return on risk.
By Kate Curtis from Trader’s Way