USD/CAD’s pullback from 1.4139 short term top extended lower to 1.3984 last week and recovered. Initial bias remains neutral this week first. Firm break of 1.4039 minor resistance will bring stronger rebound to retest 1.4139 high. On the downside, below 1.3984 will target 1.3886 support next. Overall, rise from 1.3538 is in favor to continue as long as 1.3886 support holds.
In the bigger picture, price actions from 1.4791 medium term top is likely just unfolding as a correction to up trend from 1.2005 (2021 low), with rise from 1.3538 as the second leg. A third leg should follow before up trend resumption. That is, range trading is set to extend for the medium term. For now, this will remain the favored case as long as 1.3886 support holds. However, firm break of 1.3886 will revive the case that fall from 1.4791 is indeed a larger scale correction.
In the long term picture, rising 55 M EMA (now at 1.3543) remains intact. Thus, up trend from 0.90567 (2007 low) should still be in progress. However, considering bearish divergence condition M MACD, sustained trading below 55 M EMA will argue that the up trend has completed with five waves up to 1.4791, and turn medium term outlook bearish for correction.
