Daily Pivots: (S1) 1.2835; (P) 1.2955; (R1) 1.3022; More….
USD/CAD’s decline from 1.3124 accelerated to as low as 1.2879 so far and is pressing near term channel support. While further fall could still be seen, we’d anticipate strong support at 1.2802 cluster (38.2% retracement of 1.2246 to 1.3124 at 1.2789) to contain downside and bring rebound. On the upside, break of 1.3124 will extend recent rally to 161.8% projection of 1.2061 to 1.2916 from 1.2246 at 1.3629 next. However, firm break of 1.2789/2802 will raise the chance of rejection by 1.3065 medium term fibonacci level and bring deeper fall to 55 day EMA (now at 1.2704.
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. However, rejection by 1.3065 will argue that price action from 1.2061 is merely a three wave corrective pattern. And 1.2061 will be put back into focus with medium term bearishness revived.
