USD/CAD edged slightly higher to 1.2485 last week but retreated sharply since then. Downside is so far support by 4 hour 55 EMA (now at 1.2288). Initial bias stays neutral this week first. On the downside, sustained trading below 4 hour 5 EMA will argue that rebound from 1.2005 has completed after failing medium term channel resistance. Intraday bias will be back on the downside for retesting 1.2005. On the upside, above 1.2402 minor resistance will resume the rebound from 1.2005 towards 1.2653 key structural resistance.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It might have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.
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. However, sustained break of 1.2061 will be a sign of long term bearishness. Deeper fall would be seen to 61.8% retracement at 1.1424 and below.