President Donald Trump and his advisors were loud in their threats of a trade war with China but the Shanghai Index charts shows China is shrugging off this rhetoric. The strong Shanghai Index rally suggests they believe Trump is a paper tiger.
The Shanghai Index uptrend breakout moved quickly and developed good strength. Investors now watch for a consolidation period to develop around temporary resistance near 3,230. The consolidation often precedes a continuation of the uptrend with a breakout towards a long term target of 3,400.
The recent temporary resistance level that developed near 3,175 has been broken. This level is potentially a support level for any reaction retreat in the index. The move above 3,175 was bullish and achieved the upside target near 3,210. This confirmed that a trend change has developed and that the downtrend pressure has weakened. This means the current activity is part of a trend change and not just a short time rally.
The long term Guppy Multiple Moving Averages (GMMA) indicator has compressed and turned up. The lower edge of the long term GMMA is above the level of the upper edge of the trading consolidation band near 3,140 and this is bullish.