USD/CAD’s decline accelerated last week and breached 61.8% retracement of 1.2061 to 1.2919 at 1.2389. Based on the momentum, the pair is likely resuming larger down trend from 1.4689. Initial bias stays on the downside this week for retesting 1.2061 low. On the upside, above 1.2480 minor resistance will turn bias neutral and bring consolidation before staging another fall.
In the bigger picture, current development argues that rebound from 1.2061 has completed at 1.2919, rejected by 55 week EMA (now at 1.2850) and kept below 38.2% retracement of 1.4689 to 1.2061 at 1.3065. The development also suggests that long term fall from 1.4689 is not completed yet. Decisive break of 1.2061 low will target 61.8% retracement of 0.9406 to 1.4689 at 1.1424. This will now be the favored case as long as 1.2929 resistance holds.
In the longer term picture, 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048 remains a key support level to watch. As long as this level holds, we’ll treat fall from 1.4689 as a correction and expect another rally through this level. However, sustained break of 1.2048 will turn favors to the case that rise from 0.9056 (2007 low) is a three wave corrective move that’s completed at 1.4689. And retest of 0.9056/9406 support zone could be seen in medium to long term.
