USD/CAD surged to as high as 1.2879 last week, but retreated ahead of 1.2899 resistance. Initial bias remains neutral this week first and further rise is in favor. On the upside, above 1.2879 should resume rise from 1.2401 towards 1.3022 fibonacci level. Decisive break there will carry larger bullish implications. However, break of 1.2675 will dampen this bullish view and bring deeper fall back to 1.2401 support instead.
In the bigger picture, focus stays on 38.2% retracement of 1.4667 (2020 high) to 1.2005 (2021 low) at 1.3022. Sustained break there should confirm that the down trend from 1.4667 has completed after defending 1.2061 long term cluster support. Further rise would then be seen towards 61.8% retracement at 1.3650. However, rejection by 1.3022 will maintain medium term bearishness. Break of 1.2005 will resume the down trend from 1.4667 and that carries larger bearish implications too.
In the longer term picture, we’re viewing price actions from 1.4689 as a consolidation pattern. Thus, up trend from 0.9506 (2007 low) is still expected to resume at a later stage. This will remain the favored case as long as 1.2061 support holds, which is close to 50% retracement of 0.9406 to 1.4689 at 1.2048. However, firm break of 1.2061 support will argue that USD/CAD has already started a long term down trend. Next target is 61.8% retracement of 0.9406 to 1.4689 at 1.1424.
