On its daily time frame, USD/CHF has retraced to an area of interest around the .8900 major psychological level. This area served as support in the past and might hold as resistance moving forward. Stochastic is already indicating overbought conditions and might be ready to cross down soon.
In addition, a doji candlestick can be seen on the 50% Fibonacci retracement level. If the next daily candle closes below the doji’s low, it would confirm that the pair is ready to resume its drop.
A selloff could last until the previous lows near the .8700 major psychological support. Setting a stop above the 61.8% Fib level or at .8950 would yield a 4:1 return on risk for the trade.
By Kate Curtis from Trader’s Way