USD/CAD's fall from 1.0656 short term bottom extended further to as low as 1.0096 last week. Initial bias remains on the downside this week for 50% retracement of 0.9406 to 1.0656 at 1.0031. But we're expect strong support from there, which is close to 1.0009 support, parity and 55 days EMA (now at 1.0039) to contain downside and bring rebound. Above 1.0272 minor resistance will suggest that pullback from 1.0656 is finished and flip bias back to the upside for retesting this high.

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. Rise from 0.9406 should at least be part of a long term consolidation pattern from 2007 low of 0.9056 and should extend through 1.0851 resistance (38.2% retracement of 1.3063 to 0.9406 at 1.0803), possibly to 61.8% retracement 1.1666 and above. However, break of 1.0009 support will dampen this view and firstly, suggest that rebound from 0.9406 is finished. Secondly, such development will also argue that price actions from 0.9406 are merely consolidating the down trend from 1.3063. In such case, focus will be turned back to 0.9406 low in near term.

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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