USD/CAD finally broke out of recent range and resumed whole decline from 1.0656 last week, reaching as low as 0.9799 so far. Initial bias remains on the downside this week and current fall should extend towards 0.9725 support. Though, we'd expect strong support from that level to contain downside and thus, we'll be focusing on reversal signal. Nonetheless, break of 0.9870 resistance is needed to signal short term bottoming first. Otherwise, outlook will remain bearish even in case of recovery.

In the bigger picture, 0.9406 is a medium term bottom and rise from there is not finished yet. Fall from 1.0656 should merely be a correction and would finish soon and above 0.9725 support. The third leg of the pattern from 0.9406 should then start and send USD/CAD through 1.0656 towards 38.2% retracement of 1.3063 to 0.9406 at 1.0803 and above. After all, price actions from 0.9406 medium term bottom could either be consolidation to fall from 1.3063 or the third leg of the whole consolidation pattern from 2007 low of 0.9056. In either case, stronger rally is anticipated in medium 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. Current development dampens the case that fall from 1.3063 is resuming the such down trend. But there is no change in the long term bearish view so far. A break of 0.9056 low is still anticipated after all the consolidative price actions complete.