China Isn't Backward—and Isn't Dependent on the U.S. Part 2

[Redator]

It is also noted that Chinese companies are not only actively seeking alternative markets but are also using third countries to route their goods into the United States. I wrote about this back in the summer. The practice of bypassing sanctions through intermediary countries is widely used worldwide. For example, if China cannot export goods directly to the U.S. due to high tariffs, those same goods can be shipped first to South Korea or Japan and then re-exported to the United States under the guise of Korean or Japanese origin. The added costs for logistics and reprocessing are far less than the draconian tariffs imposed by Trump.

It's well understood in financial markets that when tariffs exceed 100%, their purpose is not really to collect revenue. At those levels, cross-border trade ceases almost entirely. Trump is essentially blackmailing China with access to the U.S. market. The message: meet my conditions, or trade stops altogether. But for six months now, China has shown that while it values access to the U.S., other markets are willing and ready to buy Chinese goods.

Beijing's decision to restrict exports of rare-earth metals is a calculated countermove by Xi Jinping. The Chinese leader is demonstrating that his country is capable of not only retaliatory actions but also offensive ones. If China's industries are no longer reliant on the American market, why not strike against their largest competitor?

Trump quickly responded to Xi's decision but framed the situation as if China were hurting the entire world, not just the United States. In reality, China has shown no aggression toward the EU or other nations with amicable relations.

Regardless of Trump's tariffs, Chinese goods remain highly competitive—unlike the prohibitively expensive products made in the U.S. and Europe. Western goods are essentially luxury items for the wealthy, whereas Chinese products define the global mass-market, used by approximately 80% of the global population. In this light, China won't be lost without access to the U.S. market. But the U.S. may soon find itself cut off from vital rare-earth materials—or forced to import them indirectly through intermediary countries.

Wave Analysis for EUR/USD

According to the analysis of EUR/USD, the pair continues building an upward segment of the trend. The wave structure still depends heavily on developments aligned with Trump's decisions and the internal and foreign policy of the new U.S. administration.

The targets for the current bullish wave may extend as far as the 1.2500 range. A complex corrective wave 4 is currently forming and nearing completion—although it's unfolding in a very intricate manner. The broader bullish framework remains valid.

Therefore, in the near term, I continue to consider only long positions, even though the corrective a-b-c wave structure has not fully concluded yet. By year-end, I expect EUR/USD to rise to 1.2245, which corresponds to the 200.0% Fibonacci.

Wave Analysis for GBP/USD

The wave structure of GBP/USD has changed. The pair remains within a larger upward impulsive move, but its internal structure has become more complex.

Wave 4 is taking shape as a complicated three-wave correction—significantly longer in duration and range than wave 2. At present, we are witnessing the formation of another three-wave corrective structure, which may soon reach completion.

If confirmed, the broader uptrend may resume, with initial upside targets in the 1.3800 to 1.4000 range.

Core Principles of My Analysis:

1. Wave structures should be simple and easy to interpret. Complex patterns are harder to trade and are more prone to change.
2. If you're uncertain about the market's direction, it's better not to enter at all.
3. There is no such thing as 100% certainty in market movement. Always use stop-loss orders.
4. Elliott Wave analysis can be combined with other types of market analysis and trading strategies.

The material has been provided by InstaForex Company - www.instaforex.com