USD/CAD edged lower to 1.2363 last week but recovered after hitting 61.8% projection of 1.3389 to 1.2588 from 1.2880 at 1.2385. Initial bias remains neutral this week for some consolidations. But outlook will stay bearish as long as 1.2742 resistance holds. On the downside, break of 1.2363 will resume larger down trend to 100% projection at 1.2079.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). Further decline should be seen back to 1.2061 (2017 low). In any case, break of 1.2994 support turned resistance resistance is needed to indicate medium term bottoming. Otherwise, outlook will remain bearish in case of strong rebound.
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 stay. 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.