There is an old saying in Chinese philosophy, which says “Things will develop in the opposite direction when they become extreme”.
I am not an expert in ancient Chinese philosophy even being a Chinese myself (I am more of a fan of Western analytical philosophy), but most Chinese people would know this. When things become too extreme, they go in reverse.
Financial markets are just the same. When prices of a certain assets go into an extreme, they will reverse. That’s when a bubble bursts, for example.
The universal hatred of the US dollar, for instance, has become an extreme in the past few months. Among with many other reasons that I have explained, the market is going in the opposite direction.
The reversal was not unforeseeable, and you don’t need a conspiracy to explain it.
This article originally appeared here: “Things will develop in the opposite direction when they become extreme”
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