USD/CAD’s pullback from 1.3965 extended lower last week but downside is contained above 38.2% retracement of 1.3840 to 1.3965 at 1.3780. Initial bias stays neutral and further rise remains in favor. On the upside, firm break of 1.3965 will resume the rise from 1.3480. However, sustained break of 1.3780 will argue that the rebound from 1.3840 has completed, and bring deeper decline to 61.8% retracement at 1.3665 and below.
In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen, as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. However, decisive break of 38.2% retracement of 1.4791 to 1.3480 at 1.3981 will argue that the correction has completed with three waves down to 1.3480 already. Further break of 1.4139 will confirm and bring retest of 1.4791 high.
In the long term picture, rising 55 M EMA (now at 1.3590) remains intact. Thus, up trend from 0.9056 (2007 low) could still be in progress. However, considering bearish divergence condition M MACD, sustained trading below 55 M EMA will argue that the up trend has completed with five waves up to 1.4791, and turn medium term outlook bearish for correction to 38.2% retracement of 0.9056 to 1.4791 at 1.2600.
