USD/CAD’s decline from 1.2947 resumed last week and hit as low as 1.2492. Initial bias stays on the downside this week for 1.2421 support. Sustained break there will argue that whole rise from 1.2005 has completed at 1.2947 already. Near term outlook will be turned back for 1.2301 support first. On the upside, however, break of 1.2701 minor resistance will retain near term bullishness, and turn bias back to the upside for retesting 1.2947 high.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should 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 and above. 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 stage. 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, rejection by 55 month EMA, follow by firm break of 1.2061 support, will argue that USD/CAD has already started a long term down trend.
