USD/CAD dropped to 1.2928 last week but formed a short term bottom there and rebounded. Initial bias remains mildly on the upside for 55 day EMA (now at 1.3206) and above. But still, as long as 1.3389 resistance intact, larger fall from 1.4667 is in favor to resume. Break of 1.3057 minor support will turn bias to the downside for retesting 1.2928 low.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). Rejection by 55 week EMA is keeping outlook bearish. 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 1.3389 resistance is needed to indicate medium term bottoming. Otherwise, outlook will remain bearish in case of rebound.
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.
