The US dollar exploded on Monday, breaking above ¥105. This was based upon the vaccine, so at this point in time one would expect the trend change. It has not.
The US dollar has rallied rather significantly during the course of the week, but what you do not see on the weekly chart is that almost all of the gains came from Monday alone, so having said that it looks like the market is simply running out of momentum, as the vaccine news got everybody excited but at the end of the day it seems like we are quite away from making that happen.
Looking at this candlestick, it could be the beginning of something more important, but it is not until we break above the weekly candlestick that I would really start to take a look at that. After all, we have been in a downtrend for some time and when you look at the weekly candlesticks, you can make out a downtrend line from most of this year. We have not been able to break above that, and therefore it looks like it is just going to be more the same. Quite frankly I think that a lot of people on short-term charts are going to fade this rally, just as we are starting to see on Friday.
Ultimately, this is a market that will move back and forth based upon risk appetite, which is all over the place right now so do not be surprised that we are struggling. Ultimately, I think that nothing is change, even though there is a vaccine coming, it is not enough that we could possibly suddenly see everything turning around. At this point, I like the idea of fading this rally but probably on short-term charts.

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