USD/CAD Weekly Outlook

USD/CAD rebounded further to 1.1447 last week but turned sideway since then. Nevertheless, subsequent choppy price actions are merely consolidation in recent rally only and is supportive to the view that USD/CAD has bottomed out at 1.0784. Though, initial outlook is neutral this week with risk of another fall. But downside should be contained above 1.0940 support and bring rally resumption. Break of 1.1447 will target 1.1475/1.1814 resistance zone next. On the downside however, note that break of 1.0940 support will dampen this bullish view and indicate that rise from 1.0784 has completed with three waves up, which in turn suggests that recent down trend is still in progress.

In the bigger picture, fall from 1.3063 is treated as correction to impulsive rally from 0.9056 to 1.3063 and has met target support zone of 1.0297/0819 already. We're slightly favoring the case that such correction has completed at 1.0754 already. Break of mentioned 1.1475/1.1814 resistance zone will confirm this case and should at least bring strong rally to key cluster resistance at 1.2191 (61.8% retracement of 1.3063 to 1.7084 at 1.2192). Nevertheless, a break below 1.0784 will indicate that fall from 1.3063 is still in progress, probably to 61.8% retracement of 0.9056 to 1.3063 at 1.0587 before completion.

In the longer term picture, while a medium term top might be in place at 1.3063 already, there is no change in the view that whole rise from 0.9056 is impulsive in nature. In other words, fall from 1.3063 is treated as correction in the larger up trend only and will likely be contained by mentioned 1.0297/1.0819 support zone, with 61.8% retracement of 0.9056 to 1.3063 at 1.0587 inside. We'd expect at least another medium term rally to above 1.3063 before completing the rise from 0.9056.

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