USD/CAD’s rally continued last week and reached as high as 1.3664. Initial bias stays on the upside this week. Corrective pattern from 1.3976 should have completed at 1.3261. Firm break of 1..3684 resistance will bring retest of 1.3976. In case of retreat, further rally will remain in favor as long as 1.3515 support holds.
In the bigger picture, outlook stays bullish with 1.3222 cluster support (38.2% retracement of 1.2005 to 1.3976 at 1.3223) intact. Break of 1.3976 resistance will resume larger up trend from 1.2005 (2021 low) to 61.8% projection of 1.2401 to 1.3976 from 1.3261 at 1.4234.
In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as 55 month EMA (now at 1.2971) holds.