USD/CAD’s sharp decline last week suggests that corrective rebound form 1.2994 has completed at 1.3418 already. Larger fall form 1.4667 might be ready to resume. Initial bias remains on the downside this week for 1.2994 first. Break will confirm this bearish case and target 61.8% projection of 1.4667 to 1.2994 from 1.3418 at 1.2384. On the upside, though, break of 1.3242 support turned resistance will dampen this bearish case and turn bias neutral first.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). Sustained break of 61.8% retracement of 1.2061 to 1.4667 at 1.3056 will target a test on 1.2061 (2017 low). But we’d expect loss of downside momentum as it approaches this key support. On the upside, firm break of 1.3715 resistance will argue that this falling leg has completed and turn focus back to 1.4667/89 resistance zone.
In the longer term picture, the bullish case of resuming the up trend from 0.9506 (2007 low) is delayed. Consolidation from 1.4689 is extending for another medium term fall. As long as 1.2061 support holds, such up trend should still resume through 1.4689 at a later stage.