USD/CAD rebounded after dipping to 1.2492 last week. The development suggests that pull back form 1.2947 has completed ahead of 1.2421 support. Rise from 1.2005 is still in progress. But as a temporary top was formed at 1.2760, initial bias remains neutral this week first. On the upside, break of 1.2760 will target a test on 1.2947 high. However, break of 1.2492 will resume the fall from 1.2947 to 1.2421 key structural support.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650 and above. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.
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 stage. 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. However, rejection by 55 month EMA, follow by firm break of 1.2061 support, will argue that USD/CAD has already started a long term down trend.