Bears are approaching key lows

• USD/CHF is in a short-term downtrend that is falling towards a key low.
• The pair is oversold according to the RSI and risks a pullback.

USD/CHF is trading lower in line with the dominant short-term downtrend, after the pair has set a sequence of descending highs and lows since the August 15 high.

Given that the trend is your friend, the downtrend should continue, with the next key target at 0.8433, the key low of August 5.

USD/CHF 4 hour chart

The Relative Strength Index (RSI) momentum indicator is in the oversold zone, indicating a pullback risk. A buy signal for countertrend reactions is given when the RSI breaks out of oversold and closes back into neutral territory (above 30).

A decisive break below the August 5 lows would see the downtrend extend further lower to the next target at 0.8334.

A decisive break would be one accompanied by a long red candle that broke well below the low and closed near its low, or three red candles in a row that broke below the level.