USD/CAD’s pull back from 1.2598 extended lower last week. As long as 1.2529 minor resistance holds, deeper fall is in favor this week to 38.2% retracement of 1.2061 to 1.2598 at 1.2393, or even further to 61.8% retracement at 1.2266. But we’ll look for bottoming sign below 1.2266. Break of 1.2061 low is not anticipated for now. On the upside, break of 1.2529 minor resistance will resume the rise from 1.2061 for 1.2777 resistance.
In the bigger picture, USD/CAD should have defended 50% retracement of 0.9406 (2011 low) to 1.4869 (2016 high) at 1.2048. And with 1.2048 intact, we’d favor the case that fall from 1.4689 is a correction. Break of 1.2777 will further affirm this bullish case. That is, larger up trend from 0.9406 is not completed. And in that case, USD/CAD should target 1.3793 resistance next. However, on the other hand, firm break of 1.2048 will indicate that fall from 1.4689 is at least a medium term down trend and should target 61.8% retracement at 1.1424 and below.
In the longer term picture, the long term outlook is turned a bit mixed. As noted above, 50% retracement of 0.9406 to 1.4869 at 1.2048 is a key level to determine whether up trend from 0.9056 (2007) has already completed.
