USD/CAD’s correction from 1.3693 extended lower last week but stayed above 1.3488 support. Initial bias remains neutral first and further rally is expected. Break of 1.3693 will resume the rise from 1.3091 and target 1.3860 resistance next. However, firm break of 1.3488 will bring deeper fall to 61.8% retracement of 1.3091 to 1.3693 at 1.3321.
In the bigger picture, price actions from 1.3976 are viewed as a corrective pattern. Strong support from 55 D EMA (now at 1.3465) will solidify the case that it has completed with three waves down to 1.3091 already. Break of 1.3976 will target 61.8% projection of 1.2005 to 1.3976 from 1.3091 at 1.4309. However, sustained break of 55 D EMA will indicate that the pattern is extending with another falling leg before completion.
In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern only, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as 55 M EMA (now at 1.3082) holds.
