USD/CAD’s medium term rise resumed last week by surging to as high as 1.3099 last week. 1.3065 medium term fibonacci level was taken out already and there is no sign of topping yet. Initial bias remains on the upside this week. USD/CAD should target 161.8% projection of 1.2061 to 1.2916 from 1.2246 at 1.3629 next. On the downside, below 1.2984 minor support will turn intraday bias neutral first. But near term outlook will stay bullish as long as 1.2802 support holds.
In the bigger picture, we’re favoring the medium term bullish case. That is larger down trend from 1.4689 has completed at 1.2061 as a correction, drawing support from 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Sustained break of 38.2% retracement of 1.4689 to 1.2061 at 1.3065 will pave the way to 61.8% retracement at 1.3685. This will be the preferred case now as long as 1.2802 support 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.
