USD/CAD’s rise from 1.2286 accelerated to 1.2603 last week. The development argues that fall from 1.2947 has completed with three waves to 1.2286. But as a temporary top was formed, initial bias is neutral this week first. On the upside, break of 1.2603 will resume the rally to 1.2894/2947 resistance zone. However, break of 1.2386 will revive near term bearishness and bring retest of 1.2886 low.
In the bigger picture, medium term outlook is neutral for now. The pair drew support from 1.2061 cluster and rebounded. Yet, upside was limited below 38.2% retracement of 1.4667 to 1.2005 at 1.3022. On the upside, firm break of 1.3022 should affirm the case of medium term bullish reversal. However, break of 1.2286 will turn focus back to 1.2005 low again.
In the longer term picture, we’re viewing price actions from 1.4689 as a consolidation pattern. Thus, up trend from 0.9506 (2007 low) is still expected to resume at a later stage. This will remain the favored case as long as 1.2061 support holds, which is close to 50% retracement of 0.9406 to 1.4689 at 1.2048. However, rejection by 55 month EMA, follow by firm break of 1.2061 support, will argue that USD/CAD has already started a long term down trend. Next target is 61.8% retracement of 0.9406 to 1.4689 at 1.1424.
