Europe and America realize that if China is self-sufficient and purchases nothing from them while selling goods worth tens and hundreds of billions of dollars, then something needs to be done about it; otherwise, soon there will be no means to pay for imports, and Beijing will continue to surge ahead in economic growth. Washington was the first to go on the offensive, imposing trade tariffs. Donald Trump's position is simple—if there is an imbalance in the trade balance, it needs to be corrected. Trump's goal is to achieve at least approximately equal amounts of imports and exports. However, Trump's policy is not about opening new factories in America or reducing taxes to stimulate production. His policy is based on the "carrot-and-stick" method.
If we are purchasing $200 billion in goods from China, we should also be selling $200 billion in goods to China. It is essential to distinguish that Chinese products, raw materials, and metals are purchased not only by the government but also by private consumers. However, demand for American goods in China is low, as consumers always seek the best price-to-quality ratio. It is precisely to address this problem that Trump's trade deals exist, serving as a tool to compel purchases in the U.S. I wouldn't be surprised if, in the coming years, Europe also follows the path of limiting imports from China, artificially inflating prices on Chinese goods, and signing trade deals aimed at balancing the trade balance.
Ordinary consumers will ultimately pay for this "injustice" by being forced to pay more for the same goods. Europe is already considering imposing tariffs on all packages from abroad to "support domestic business." The situation is likely to worsen if China continues to sell a lot while buying little.
Economic growth is a separate story in the context of the "China problem." China's economic growth is largely ensured by a high level of exports. This results in European or American growth being constrained by the same factor. Where an average American could support a domestic producer, they instead choose a Chinese candlestick or mug. American mugs priced at $50 each are no longer appealing to anyone.
Wave Analysis for EUR/USD:
Based on my analysis of EUR/USD, I conclude that the instrument is continuing to build an upward trend segment. In recent months, the market has paused, but Donald Trump's policies and the Federal Reserve remain significant factors in the potential decline of the American currency. The targets for the current segment of the trend may extend to the 25th figure. Currently, the upward wave structure may continue to develop, and I expect that from the current positions, the third wave of this set will progress, which can be either "c" or "3." At this time, I remain in buying positions with targets around the 1.1740 mark.
Wave Analysis for GBP/USD:
The wave structure of the GBP/USD instrument has changed. We continue to deal with an upward, impulsive segment of the trend, but its internal wave structure has become complex. The downward corrective structure a-b-c-d-e in "4" appears quite complete. If this is indeed the case, I expect the main trend segment to resume its progression, with initial targets around the 38 and 40 levels. In the short term, one can expect the formation of wave "3" or "c," with targets around 1.3280 and 1.3360, corresponding to 76.4% and 61.8% on the Fibonacci scale.
Key Principles of My Analysis:
- Wave structures should be simple and understandable. Complex structures are difficult to trade, as they often lead to changes.
- If there is uncertainty about what is happening in the market, it is better not to enter it.
- There can never be 100% certainty in the direction of movement. Don't forget about protective orders like Stop Loss.
- Wave analysis can be combined with other types of analysis and trading strategies.
