USD/CAD’s extended rebound last week indicates short term bottoming at 1.3730. Initial bias is mildly on the upside this week. However, strong resistance is expected from 38.2% retracement of 1.4247 to 1.3730 at 1.3927 to limit upside. Break of 1.3841 will bring retest of 1.3730 first. However, firm break of 1.3927 will bring stronger rally to 61.8% retracement at 1.4050, to extend the corrective pattern from 1.3480 low with another leg.
In the bigger picture, the pattern from 1.4791 (2025 high) is still extending, with fall from 1.4247 as the third leg. Firm break of 1.3480 will pave the way to 100% projection of 1.4791 to 1.3480 from 1.4247 at 1.2936. For now, medium term risk will stay on the downside as long as 1.4247 resistance holds, in case of rebound.
In the long term picture, considering bearish divergence condition in M MACD, fall from 1.4791 could be corrective whole up trend from 0.9056 (2007 low). Firm break of 1.3480 support and sustained trading below 55 M EMA (now at 1.3634) will pave the way to 38.2% retracement of 0.9056 to 1.4791 at 1.2600. Nevertheless, strong rebound from 55 M EMA will maintain medium term bullishness.
