USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.1407; (P) 1.1764; (R1) 1.2081; More.

USD/CAD's sharp retreat from 1.2129 continues today and reaches as low as 1.1538 so far. A short top might be in place with 1.1542 minor support taken out and with 4 hours MACD dragged below signal line. Outlook is turned neutral for the moment with risk of further pull back to 38.2% retracement of 1.0297 to 1.2129 at 1.1429 first. Though, downside should be contained well above 61.8% retracement at 1.0997 and bring rally resumption. On the upside, above 1.1800 minor resistance will flip intraday bias back to the upside for retesting 1.2129 high.

In the bigger picture, preferred interpretation of the up trend from 0.9056 is that first wave rally is completed at 1.0248. Subsequent second wave consolidation was in form of triangle and finished at 0.9823. Rise from there is treated as third wave rally and is still now still in the acceleration phase. In other words, USD/CAD is just in the middle of a long term up trend which should extend beyond 1.2737 resistance to 261.8% projection of 0.9056 to 1.0248 from 0.9823 at 1.2944. Also, while interim consolidation could be seen, downside should be contained above 1.0819 resistance and bring up trend resumption. Break of 1.0819 is needed to invalidate this view.

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