USD/CAD remained consolidated below 1.4247 last week and the outlook was unchanged. Initial bias remains neutral this week first. While a deeper pullback cannot be ruled out, the downside should be contained above resistance at 1.3965 which has turned into support. Above 1.4247 the rally from 1.3480 to 61.8% retracement from 1.4791 to 1.3480 will resume at 1.4290. A strong breakout there will pave the way for a return to the high price of 1.4791.
In the bigger picture, the current development suggests that the drop from 1.4791 has completed as a three-wave correction to 1.3480. It is still too early to judge whether the rally from there is a corrective bounce, or a resumption of the uptrend greater than 1.2005 (2021 low). But either way, we should see a retest of the 1.4791 high next.
In the longer-term picture, the high of the 55M MA (now at 1.3631) remains in place. Therefore, the uptrend from 0.9056 (2007 low) may still be in progress. However, given the case of a bearish M MACD divergence, sustained trading below the 55 EMA will argue that the uptrend has been completed in five waves up to 1.4791, and turns the medium-term outlook bearish for a correction to the 38.2% retracement from 0.9056 to 1.4791 at 1.2600.
