USD/CAD jumped to as high as 1.0656 last week but formed a short term top there, on bearish divergence condition in 4 hours MACD, and retreated. Initial bias is neutral this week as some more consolidation could be seen. But at this point, we'd expect strong support from 1.0179/91 (50% retracement of 0.9725 to 1.0656 at 1.0191 and 38.2% retracement of 0.9406 to 1.0656 at 1.0.179) to contained downside. Above 1.0482 will flip bias back to the upside for retesting 1.0656 resistance first.

In the bigger picture, that down trend from 2009 high of 1.3063 has finished at 0.9406 on bullish convergence condition in weekly MACD. Current rally from 0.9406 should target 1.0851 resistance (38.2% retracement of 1.3063 to 0.9406 at 1.0803). Break there will extend the rebound to 61.8% retracement 1.1666 and above. On the downside, break of 1.0009 support is needed indicate completion of the rally from 0.9406. Otherwise, we'll stay bullish in USD/CAD.

In the longer term picture, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed even though bullish convergence condition was seen in monthly MACD. The fall from 1.3063 to 0.9406 looks corrective and could either be part of a sideway pattern from 0.9056, or a corrective to rise from there. The long term outlook, i.e., the possibility of taking out 1.3063 high, will depend on whether rise from 0.9406 would eventually develop into a strong impulsive wave. We'll wait and see.

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