SUPPORTLINE by FONG MIN YUAN

DIALOG Group Bhd saw the continuation of a rebound that started last Friday, which is taking the counter to challenge the 50-day simple moving average (SMA).

The stock experienced a correction of over 10% since it began its descent at RM3.46 on June 11.

At present, it appears the downtrend may be taking a breather although a clear reversal is not yet on the books.

For the immediate term, some technical indicators are suggesting a return to upside momentum with certain indexes having fallen to oversold conditions.

The slow-stochastic momentum index is seeing a return of the percent K oscillator from the oversold area to enact a positive crossing with the percent D oscillator, marking a possible return to bullishness.

The 14-day relative strength index is also showing an upside push from oversold territory and now sits at 31 points.

Still signalling a downtrend is the daily moving average convergence/ divergence line, which has fallen into negative territory.

It remains at a distance from the signal line, suggesting that the current downtrend remains intact.

Given the mixed signals, a return to an uptrend cannot be confirmed over the immediate term.

Should the share price push higher past the 50-day SMA, it would face its next reistance at RM3.30, slightly above the short-term 14- and 21-day SMAs.

A positive crossing of these uppermost SMAs would improve the upside prospects of the share price and put it in good stead to return yet higher to its recent peak of RM3.46.

Nevertheless, to the lower end of the chart, the immediate support of RM3.11 remains close by, suggesting that a sudden sharp pullback would result in a breach and a descent to the next support of RM3.

The comments above do not represent a recommendation to buy or sell.

Note: This article first appeared in StarBiz Premium yesterday.