USD/CAD’s fall from 1.4247 extended lower last week and broke through 1.3965 cluster support (38.2% retracement of 1.3480 to 1.4247 at 1.3954). The development argues that rebound from 1.3480 might have completed with three waves up to 1.4247 already. Initial bias is on the downside this week for 61.8% retracement at 1.3773. For now, risk will stay on the downside as long as 1.4127 resistance holds, in case of recovery.
In the bigger picture, rejection below 61.8% retracement of 1.4791 to 1.3480 at 1.4290 suggests that the pattern from 1.4791 medium term is still extending. Firm break of 55 W EMA (now at 1.3883) will solidify this case, and bring deeper decline through 1.3480 low.
In the long term picture, rising 55 M EMA (now at 1.3636) remains intact. Thus, up trend from 0.9056 (2007 low) could still be in progress. However, considering bearish divergence condition M MACD, sustained trading below 55 M EMA will argue that the up trend has completed with five waves up to 1.4791, and turn medium term outlook bearish for correction to 38.2% retracement of 0.9056 to 1.4791 at 1.2600.
. The development argues that rebound from 1.3480 might have completed with three waves up to 1.4247 already. Initial bias is on the downside this week for 61.8% retracement at 1.3773. For now, risk will stay on the downside as long as 1.4127 resistance holds, in case of recovery.){kind=link}