Despite dipping to as low as 1.0210 last week, USD/CAD was supported above mentioned 1.0206 support (38.2% retracement of 0.9799 to 1.0445 at 1.0198) and recovered. Lost of momentum towards the last hours indicates that consolidation from 1.0445 is going to extend further. Initial bias remains neutral this week for some more sideway trading. On the downside, break of 1.0211 will bring deeper correction to 61.8% retracement at 1.0046. On the upside, break of 1.0445 will confirm resumption of rise from 0.9799 and should target 1.0522/0656 resistance zone next.
In the bigger picture, current development indicates that rebound from 0.9406 is resuming. Such rise is either a correction to fall from 1.3063 or the third leg of the whole consolidation pattern from 2007 low of 0.9056. In either case, USD/CAD should target 38.2% retracement of 1.3063 to 0.9406 at 1.0803 first and possibly further to 100% projection of 0.9406 to 1.0656 from 0.9799 at 1.1049 before completion. Break of 0.9799 support is needed to invalidate this view or we'll stay bullish even in case of deep pull back.
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.