USD/CHF has recently broken below a support zone visible on the 1-hour time frame, indicating that further losses might be in the cards. After dipping to a low of .8720, the pair has shown signs of retracing, which might offer the chance to jump in the downtrend at a better price.

The Fibonacci retracement tool on the latest swing high and low indicates that the 50% level is closest in line to the former support area. On top of that, stochastic is in the overbought zone with a bearish divergence. As you can see, price made lower highs from May 6 to 8 while the oscillator made higher highs.

Shorting at the 50% Fib with a stop above the 61.8% Fib and a target of new lows could yield at least a 2:1 return on risk.

By Kate Curtis from Trader’s Way