USD/CAD breached 1.2629 last week but recovered quickly since then. Initial bias remains neutral this week for some consolidations first. Near term outlook stays bearish as long as 1.2834 resistance holds. On the downside, break of 1.2623 will resume the down trend from 1.4667 to 61.8% projection of 1.4667 to 1.2994 from 1.3389 at 1.2355. On the upside, break of 1.2834 should indicate short term bottoming and turn bias back to the upside for 1.2957 resistance.
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.
