USD/CAD's choppy correction from 1.0445 continued last week and reached as low as 0.9979. Initial bias remains on the downside this week and deeper fall would be seen towards 0.9799 key support level. However, as we're treating fall from 1.0445 as a correction, we'd expect strong support above 0.9799 to contain downside and bring strong rebound. Though, break of 1.0084 minor resistance is needed to signal short term bottoming, and break of 1.0231 is needed to confirm reversal. Otherwise, near term outlook will stay mildly bearish.
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.