GBPCHF has been consolidating since reaching a 7-month peak of 1.3307 in December, forming a ceiling around 1.2850 and a floor around 1.2530 in a sideways range. It’s worth pointing out though, that price action has recently moved below the Ichimoku cloud, suggesting that the risk of a breakout below the range is greater than that of an upside break.

The momentum indicators also point to a slight downside risk as the RSI has reversed lower, dipping into bearish territory, while the MACD histogram has also turned marginally negative.

If the downward momentum accelerates, the bottom of the range at 1.2530 is a critical support to watch. Not too far down, sellers are likely to face an additional obstacle at the 50% Fibonacci retracement of the uptrend from 1.1671 to 1.3307 at 1.2489, with the 200-day moving average (MA) just above it reinforcing this support.

A breach of this region would bring the 61.8% Fibonacci of 1.2296 into view and if that’s also broken, it would raise the prospect of the medium-term neutral picture switching to negative.

However, if GBPCHF manages to bounce off the bottom of the range and overcomes immediate resistance at the 50-day MA and the 38.2% Fibonacci of 1.2682, it should gain enough momentum to climb back inside the Ichimoku cloud. First though, it would have to fend off the bears at the entrance of the cloud and the February highs around the 1.2800 mark.

If the pair is then successful in climbing above the range at 1.2850, the next big test will come at the cloud top at 1.2921, which is also the 23.6% Fibonacci. Higher up, the bulls would turn their attention to the December top of 1.3307, which if surpassed, would signal a resumption of the 2019 uptrend.