USD/CAD continued to lose downside momentum last week. But after all, the down trend still extended. Initial bias stays on the downside this week for 1.2460 low. Considering bullish convergence condition in 4 hour MACD, we’ll be cautious on strong support from there to contain downside and bring rebound. On the upside, break of 1.2700 resistance will indicate short term bottoming and turn bias back to the upside for 1.2968 support turned resistance.
In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. Fall from 1.3793 is seen as the third leg and should target 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we’d look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.
In the longer term picture, rise from 0.9056 (2007 low) is viewed as a long term up trend. It’s taking a breath after hitting 1.4689. But such rise expected to resume later to test 1.6196 down the road. But firm break of 50% retracement of 0.9406 to 1.4869 at 1.2048 will raise doubt over this view.
