USD/CAD’s rebound from 1.2994 resumed last week and reached as high as 1.3418. As a temporary top was formed there, initial bias is neutral this week for some consolidations first. Further rise is expected as long as 1.3171 support holds. Break of 1.3418 will target 38.2% retracement of 1.4667 to 1.2994 at 1.3633, to correct the whole fall from 1.4667. However, on the downside, break of 1.3171 will argue that the rebound has completed, and turn bias back to the downside for retesting 1.2994.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). Sustained break of 61.8% retracement of 1.2061 to 1.4667 at 1.3056 will target a test on 1.2061 (2017 low). But we’d expect loss of downside momentum as it approaches this key support. On the upside, firm break of 1.3715 resistance will argue that this falling leg has completed and turn focus back to 1.4667.89 resistance zone.
In the longer term picture, the bullish case of resuming the up trend from 0.9506 (2007 low) is delayed. Consolidation from 1.4689 is extending for another medium term fall. As long as 1.2061 support holds, such up trend should still resume through 1.4689 at a later stage.