USD/CAD spiral lower last week with diminishing downside momentum, as seen in 4 hour MACD. While further decline might be seen initially this week, we’d expect strong support from 1.3016 to contain downside and bring rebound. ON the upside, break of 1.3122 minor resistance will turn bias back to the upside for 55 day EMA (now at 1.3217). However, decisive break of 1.3016 will carry larger bearish implications and target 1.2781 support next.
In the bigger picture, 38.2% retracement of 1.2061 to 1.3664 at 1.3052 remains intact. Medium term rise from 1.2061 low is in favor to resume sooner or later. Firm break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 will confirm and target 1.4689 high. However, sustained break of 1.3052 will confirm completion of up trend from 1.2061 (2017 low). Further fall should be seen to 61.8% retracement at 1.2673 next.
In the longer term picture, outlook remains unchanged that price actions from 1.4689 (2016 high) are forming a corrective pattern. As long as 1.2061 support holds. up trend from 0.9406 (2011 low) in in favor to resume through 1.4689 at a later stage.
