As the Israeli stock market experiences a period of volatility in the wake of last week's elections, technical traders are keeping a close eye on the current level of the benchmark TA-25 index.
Technical analysis is the study of trading based on previous performance with more emphasis on price movements than the fundamentals of the stock/index involved.
The 807 level is crucial in determining the short-term outlook for the Israeli market. According to the chart, traders say there is a fair degree of support for the index at 807, which has been tested but did not break over the last week as the post-election worries about who would take control of the finance portfolio took a toll on the market.
In the run-up to the vote, when it looked as though Kadima would coast to power, the market had been reassured by the expected margin of victory and tested the year's highs around the 845 mark.
However, when it started to become clear that only a narrow victory would be won, the markets - which hate uncertainty at the best of times - responded with four falls in five sessions, wiping nearly 5% off the value of the index.
In the short term, with the market's firm rally off the 807 low on Monday to 823 (albeit on low volume), traders believe that - on technical grounds - the index should continue to climb back to the 830 level.
They note, however, that there is serious resistance at 835/840, which would require a hefty dose of good news to overcome, such as the formation of a workable coalition in government coupled with positive corporate news from some of the larger companies.
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