Despite edging higher to 1.0026 last week, USD/CAD failed to sustain above parity and dropped sharply since then. The break of 0.9829 minor support dampened our bullish view. Initial bias remains on the downside this week for a test on 0.9725 support. Break there will suggest that whole rebound form 0.9406 is finished and deeper decline would then be seen to retest this low. On the upside, above 0.9860 minor resistance will turn bias neutral and bring recovery. But break of 1.0026 resistance is needed to confirm resumption of rise from 0.9406. Otherwise, we'll be near term neutral in USD/CAD.
In the bigger picture, a medium term bottom should be formed at 0.9406 on bullish convergence condition in weekly MACD. But subsequent rebound lacked follow through momentum so far and the pair struggled to sustained above 55 weeks EMA so far (now at 0.9906). Also, parity is having strong effect as a psychological resistance. Whole down trend from 1.3063 (2009 high) is possibly still in progress for another low below 0.9406. Though, even in that case, we'll look for reversal signal again ahead of 0.9056 key support level. On the upside, above 1.0026 resistance will revive the near term bullish case and should extend rebound from 0.9406 towards 1.0851 key resistance
In the longer term picture, firstly, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed. Secondly, the medium term fall from 1.3063 is so far looking corrective. Hence, we're slightly favoring the case that price actions from 0.9056 are developing into a long term corrective pattern.