USD/CHF has been trading inside a rising channel for nearly a month before the ECB rate decision last week triggered a sharp break lower. Since then price has made a decent correction close to the bottom of the channel.

Stochastic is moving down from the overbought area, indicating that a selloff may be in the cards. This could be enough to push the pair to new lows, possibly until the .8800 major psychological support if the downtrend persists.

Shorting on a pullback to the .8950 broken channel support with a stop inside the channel and a target of .8850 could yield a 3:1 return on risk for a short-term trade.

By Kate Curtis from Trader’s Way