USD/CAD dropped further to 1.2994 last week but recovered just ahead of 100% projection of 1.4048 to 1.3315 from 1.3715 at 1.2982. Initial bias is neutral this week for some more consolidations first. But outlook stays bearish as long as 1.3239 resistance holds. On the downside, break of 1.2982 should target 161.8% projection at 1.2529. Though, on the upside, firm break of 1.3239 will indicate short term bottoming, and turn bias back to the upside for rebound.
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, though, break of 1.3715 resistance is needed to confirm completion of the fall. Otherwise, outlook will stay bearish.
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.
