USD/CAD’s decline accelerated last week to as low as 1.2945. 1.2968 cluster support, 61.8% retracement of 1.2460 to 1.3793 at 1.2969 was already met but there is no clear sign of bottoming yet. Initial bias stays on the downside this week. As noted before, corrective rise from 1.2460 has completed at 1.3793 already. Sustained trading below 1.2968/9 will target 1.2460 next. On the upside, above 1.3045 minor resistance will indicate short term bottoming and bring rebound back to 1.3164 support turned resistance first.
In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The second leg should have finished at 1.3793. Break of 1.2460 will tend such correction to 50% retracement of 0.9406 to 1.4869 at 1.2048. At this point, we’d look for strong support from there to contain downside and bring rebound. However, firm break there will target 100% projection of 1.4689 to 1.2460 from 1.3793 at 1.1564.
In the longer term picture, rise from 0.9056 (2007 low) is viewed as a long term up trend. It’s taking a breath after hitting 1.4689. But such rise expected to resume later to test 1.6196 down the road. But firm break of 50% retracement of 0.9406 to 1.4869 at 1.2048 will raise doubt over this view.
