USD/CAD failed to break through 55 day EMA (now at 1.2630) again last week and extended range trading. Initial bias remains neutral this week first. On the upside, break of 1.2646 will resume the rebound from 1.2363. But overall outlook will stay bearish as long as 1.2742 resistance holds, and eventual downside breakout is expected. On the downside, break of 1.2501 minor support will bring retest of 1.2363 low first.
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 1.2994 support turned resistance resistance is needed to indicate medium term bottoming. Otherwise, outlook will remain bearish in case of strong 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.