USD/CAD: temporary or larger correction?

USD/CAD dropped after reaching today's high of 1.2948. A temporary decline was expected after its amazing rally. Still, the current decline will be only a temporary one if the immediate support levels hold.

The pair declined as the DXY slipped lower. The Dollar Index has registered an impressive rally up to 93.72 level. The index could come back to test and retest the level of 93.43 which is the former high and a broken resistance level. Its current decline makes the US dollar depreciate versus its rivals.

The Canadian retail sales data have come in mixed earlier. It showed an increase of 4.2% versus 4.4% expected, while the Core Retail Sales registered 4.7% growth, exceeding the 4.5% estimate.

USD/CAD plunged after reaching the 1.2928 - 1.2957 resistance area. Now it is close to reaching the fourth warning line (WL4) of the former descending pitchfork. Personally, I've drawn a Fibonacci retracement on the last swing higher.

If the price stays above the 23.6% retracement level and beyond the 1.2807 static support, it will signal potential upside continuation. So, if the current decline is only a temporary one, USD/CAD could offer great long opportunities from above the mentioned support levels.

False breakouts or rejections from the 1.2807 static support could signal a new upside momentum. Also, if the price moves sideways above this level, it will be a signal that the decline is likely to be over.