USD/CAD dropped sharply to as low as 1.0106 last week but rebounded strongly on Friday. Break of 1.0106 minor resistance indicates that a short term bottom is formed on bullish convergence condition in 4 hours MACD. Initial bias is mildly on the upside this week and further rise could be seen towards upper trend line resistance (now at 1.0530). On the downside, though, below 1.0202 minor support will flip intraday bias back to the downside for 1.0106 low.

In the bigger picture, while the decline to 1.0106 was sharp and deep, USD/CAD managed to drew support from 1.0109 and is still staying in range of 1.0109/0851. It's still possible that recent price actions from 1.0734 are consolidative in nature. A break above 1.0675 will signal that such consolidation is completed and will target another high a above 1.0851. However, a break below 1.0106 will indicate that 0.9929 is not the medium term bottom yet. Though, considering bullish convergence conditions in daily and weekly MACD, we believe that medium term decline from 1.3063 is going to reverse soon, probably after a brief break of 0.9929 low. Hence, focus will be on reversal signal even in case of another fall.

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 sideway pattern.

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