New Zealand dollar futures (6N) have been creeping higher since the start of the year within a tight channel. This followed some choppy trading in late 2015 which saw the price rally off the low of 0.6198.
Despite the rallies, the long-term trend remains down, as the currency future has only managed to retrace about 50% of the last major down wave which occurred between April and September 2015.
Figure 1. New Zealand Dollar Futures, Continuous Daily Chart
With the overall trend down, and the price moving very slowly higher within the channel (if buying was really strong we would see much sharper moves to the upside), the recent drop below the channel indicates the price could be in for another move to the downside.
The June contract breached support on May 6, and is seeing follow-through selling on May 9. The selling on May 9 has also pushed the price below the April 27 intraday low of 0.6791, creating a small double top chart pattern.
Figure 2. New Zealand Dollar Futures, June Daily Chart
The double top signals an initial decline to 0.6543. Based on the longer-term downtrend though, the breach of the channel indicates a broader decline. 0.6450 to 0.64 is a potential price target, above support at 0.6370 to 0.63.
If the price rallies back above 0.7039 then the downside breakout was false. But with the market moving weakly to the upside, and the broader downtrend still in place, long trades aren't being considered at this point.