USD/CAD continued to stay in tight range above 38.2% retracement of 0.9799 to 1.0445 at 1.0198 last week. Initial bias remains neutral this week and more sideway trading might be seen. On the upside, break of 1.0325 minor resistance will indicate that retreat from 1.0445 is already complete and should flip bias back to the upside. Further break of 1.0445 will target 1.0522/0656 resistance zone next. However, below 1.0200 will extend the correction from 1.0445 deeper to o 61.8% retracement at 1.0046 instead.

In the bigger picture, correction from 1.0656 is finished with three waves down to 0.9799 and rise from there is resuming the medium term rebound from 0.9406. Such rise from 0.9406 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.