After jumping by almost 11% since last week’s euro peg announcement by the Swiss National Bank, the GBPCHF currency pair is now testing key short term resistance barriers at the 1.4000 psychological figure.  This is a 3-month high for the currency cross, which may pose a threat to the GBPCHF bullish momentum.

Supporting the notion of a potential failure to break higher is a textbook rising wedge formation in the 60-minute chart.  The wedge formation is bearish as it combines with a bearish divergence in the MACD oscillator – indicative of diminishing momentum in the price action.

Source:  FXAlliance Charts

As a result, a breakdown through support at 1.3960 would produce a decline in the currency pair to immediate support of 1.3705.  This level is the 23.6% fib from the 1.2625-1.4031 move higher.  Further support is seen at the 1.3500 psychological level.

Although longer term technical indications show a retracement to 1.3165, we remain cautious at the moment – instead keeping an eye on the 1.3332 support level break.