USD/CAD Weekly Outlook

USD/CAD turned sideway after forming a short term top at 1.1653 last week, just inch below 38.2% retracement of 1.3063 to 1.0784 at 1.1655. Short term outlook remain neutral and some more consolidation could be seen. Another fall cannot be ruled out but after all downside is expected to be contained by 1.1226 clusters support (50% retracement of 1.0784 to 1.1653 at 1.1219) and bring rally resumption. Above 1.1653 will bring a test of 1.1814 resistance. However, note that a break of 1.1226 will be an important signal that whole rebound from 1.0784 has completed and will turn outlook bearish for retesting this low

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, considering that daily MACD is now positive too. 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 1.1226 cluster support will indicate that such rise from 1.0784 has completed. In addition, the three wave structure will aurge 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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