The AUDNZD pair on the weekly chart exhibits a bullish trend, characterized by an ascending trendline serving as a strong support area. The trendline has proven its efficacy by facilitating price rebounds on five occasions, marked by blue dots.
In the latest candlestick pattern, the price has formed a three black crows pattern, highlighted within a yellow box. This pattern suggests a potential bearish bias. If the bearish scenario unfolds, there is a risk of the trendline support being breached or experiencing a breakout. The breakout is anticipated to extend towards the 1.04-1.03 range, which has previously served as a rebound area.
Technical analysis is complemented by a fundamental perspective, with a focus on real interest rates. Currently, Australia maintains a real interest rate of -1.90%, while New Zealand stands at -0.50% factoring in overall inflation.
In summary, the technical analysis signals a potential bearish trend triggered by the three black crows pattern, with a target breakout zone of 1.04-1.03. The fundamental aspect reinforces this outlook, emphasizing the negative real interest rates in both Australia and New Zealand.
I'll add something to the three black crows pattern (and three white soldiers for the bullish pattern). The pattern becomes strongest when all three bars are of decent sizes. Also, if all three bars have bodies of the bars that are dominant then that also adds strength. The problem here however, is that this is counter to the strong technical of the trend line. Three black crows or three white soldiers patterns are best when they are "initiating" - meaning that they begin a move. More specifically you want to see it at the end of a really prolonged trend. Then the odds increases even more.
DNP-FX
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@kosai19, Hi, Thanks a bunch for taking the time to share your insights on the analysis. Your additional input on the three black crows pattern and its strength when all three bars are of decent sizes, along with the dominance of bodies, is truly valuable. I appreciate the nuanced perspective you brought in, especially in considering the counterbalance with the robust technical aspect of the trendline. It's interesting to note your emphasis on the "initiating" nature of these patterns and their effectiveness at the end of a prolonged trend. Your clarification adds a layer of depth to the analysis, and I'll definitely keep that in mind for future assessments.