USD/CAD’s rebound last week confirmed short term bottoming at 1.2412. Initial bias stays on the upside this week. Current rebound could be corrective whole decline from 1.3793 and might target 38.2% retracement of 1.3793 to 1.2412 at 1.2940. On the downside, break of 1.2552 minor support will indicate completion of the rebound. In such case, intraday bias will be turned back to the downside for 1.2412 low.
In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. A short term bottom is formed at 1.2412 after hitting 61.8% projection of 1.4689 to 1.2460 from 1.3793 at 1.2415. But there is no sign of completion of the correction yet. Break of 1.2412 will target 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. Meanwhile, sustained break of 1.2968, 38.2% retracement of 1.3793 to 1.2412 at 1.2940 will be the first sign of completion of the correction and will turn focus back to 1.3793 key resistance.
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 is 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.
