USD/CAD dropped sharply last week but stayed above 1.3017 support. Near term outlook is unchanged with initial bias stays neutral this week. We’re seeing price actions from 1.3588 as a consolidative pattern. Break of 1.3588 will extend the whole choppy rise from 1.2460 to next fibonacci level at 1.3838 and possibly above. Meanwhile, sustained break of 1.3017 will indicate that rise from 1.2460 has completed and turn outlook bearish for 1.2460.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg is still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. As rise from 1.2460 is seen as a corrective move, we’d look for reversal signal above 1.3838. Meanwhile, break of 1.3017 will likely start the third leg to 1.2460 and below.

In the longer term picture, rise from 0.9056 (2007 low) is viewed as a long term up trend. It’s taking a breath after hitting 1.4689. But such rise expected to resume later to test 1.6196 down the road.

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