USD/CAD’s corrective rebound from 1.2363 extended higher last week but upside is held well below 1.2742 resistance so far. Initial bias remains neutral this week and outlook stays bearish. On the downside, break of 1.2363 will resume larger down trend from 1.4667. Next target is 100% projection of 1.3389 to 1.2588 from 1.2880 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.