USD/CAD edged lower to 1.2688 last week but turned into sideway consolidation since then. Initial bias remains neutral this week for some more sideway trading first. Still, outlook remains bearish as long as 1.2928 support turned resistance holds. Break of 1.2688 will resume larger down trend from 1.4677. Next near term target is 161.8% projection of 1.3389 to 1.2928 from 1.3172 at 1.2426.
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 1.3389 resistance is needed to indicate medium term bottoming. Otherwise, outlook will remain bearish in case of 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.