Some volatility was seen in USD/CAD last week but there was no decisive movement. Initial bias is neutral this week first. As long as medium term channel support holds (now at 1.2986), we’d expect further rise ahead in the pair. On the upside, above 1.3173 will indicate completion of correction from 1.3385. In such case, intraday bias will be turned back tot he upside for 1.3289 resistance first. However, sustained trading below the channel, and break of 1.2961 support, will carry larger bearish implication and turn outlook bearish.
In the bigger picture, as long as channel support (now at 1.2982) holds, we’re holding to the bullish view. That is, fall from 1.4689 (2015 high) has completed at 1.2061, ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Further rally should be seen for 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above. However, sustained break of the channel support will argue that rise from 1.2061 has completed. Further decline should be seen to 38.2% retracement of 1.2061 to 1.3385 at 1.2879 first. Sustained break will pave the way to 61.8% retracement at 1.2567 and below.
In the longer term picture, corrective fall from 1.4689 (2015 high) should have completed with three waves down to 1.2061, just ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. The development keeps long term up trend from 0.9406 and that from 0.9056 (2007 low) intact. It’s early to tell, but there is now prospect of extending the long term up trend to 61.8% projection of 0.9406 to 1.4689 from 1.2061 at 1.5326 in medium to long term.