USD/CAD’s decline accelerated to as long as 1.2335 last week. The development suggests that rebound from 1.2005 has already finished at 1.2947. Initial bias stays on the downside this week for 161.8% projection of 1.2947 to 1.2492 from 1.2894 at 1.2158 next. On the upside, above 1.2445 minor resistance will turn intraday bias neutral and bring consolidations. But risk will now remain on the downside as long as 1.2592 support turned resistance holds.
In the bigger picture, the rejection by 38.2% retracement of 1.4667 to 1.2005 at 1.3022 argues that rebound from 1.2005 is merely a corrective rise, which is complete. More importantly, the down trend from 1.4667 (2020 high). is not over yet. Sustained break of 1.2005 will extend the down trend to next long term fibonacci level at 61.8% retracement of 0.9406 to 1.4689 at 1.1424. In any case, outlook will not turn bullish as long as 1.2947 resistance holds.
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. Next target is 61.8% retracement of 0.9406 to 1.4689 at 1.1424.
