USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.2368; (P) 1.2460; (R1) 1.2635; More.

USD/CAD's rally continues as expected and reaches as high as 1.2786 so far. At this point, intraday bias remains on the upside as long as 1.2545 minor support holds. Further rally is expected to test 1.3015 high. Break will confirm that medium term up trend has resumed. On the downside, below 1.2545 will turn intraday outlook neutral and bring pull back. But downside should be contained above 1.2098 support and bring rally resumption.

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 0.9823 is treated as third wave rally and should have completed at 1.3015 already. Hence, some medium scale consolidation might be seen now. However, note that firstly, downside of such consolidation should be contained by bottom of the fourth wave in a lower degree at 1.1304. Secondly, sustained break of 1.3015 will confirm that the medium term up trend has resumed, with the fifth wave started and should then target 61.8% retracement of 1.6196 to 0.9056 at 1.1783 at 1.3469.

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