USD/CAD edged lower to 1.2588 last week but quickly recovered again. Initial bias stays neutral this week first. Further decline is expected as long as 1.2798 resistance holds. Break of 1.2588 will resume the down trend from 1.4677 to 61.8% projection of 1.4667 to 1.2994 from 1.3389 at 1.2355. However, decisive break of 1.2798 should confirm short term bottoming, on bullish convergence condition in 4 hour MACD. Intraday bias will be turned back to the upside for 1.2957 resistance and possibly above.
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.