USD/CAD’s down trend extended to as low as 1.2706 last week. But a temporary low was formed after hitting 100% projection of 1.3389 to 1.2928 from 1.3172 at 1.2711. Initial bias is turned neutral for some consolidations first. Upside of recovery should be limited by 1.2928 support turned resistance to bring fall resumption. On the downside, firm break of 1.2706 will target 161.8% projection at 1.2426.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). Further decline should be seen back to 1.2061 (2017 low). In any case, 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, we’re viewing price actions from 1.4689 as a consolidation pattern. Thus, up trend from 0.9506 (2007 low) is still expected to resume at a later stay. This will remain the favored case as long as 1.2061 support holds, which is close to 50% retracement of 0.9406 to 1.4689 at 1.2048.
