USD/CAD gyrated higher to 1.3289 last week but fell sharply since then. The corrective structure of the rebound argues that decline from 1.3385 isn’t completed yet. Initial bias is mildly on the downside for 1.3063 support first. Break will target 100% projection of 1.3385 to 1.3063 from 1.3289 at 1.2967. But we’d expect strong support from rising channel line (now at 1.2878) to contain downside and bring rebound.
In the bigger picture, as long as channel support (now at 1.2878) holds, we’re holding to the bullish view. That is, fall from 1.4689 (2015 high) has completed at 1.2061, ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Further rally should be seen for 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above. However, sustained break of the channel support will argue that rise from 1.2061 has completed and will bring deeper fall to 1.2526 support to confirm.
In the longer term picture, corrective fall from 1.4689 (2015 high) should have completed with three waves down to 1.2061, just ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high). The development keeps long term up trend from 0.9406) and that from 0.9056 (2007 low) intact. It’s early to tell, but there is now prospect of extending the long term up trend to 61.8% projection of 0.9406 to 1.4689 from 1.2061 at 1.5326 in medium to long term.