DIALOG GROUP BERHAD (Technical Buy)

• Dialog Group Berhad (DIALOG) closed at RM1.85 yesterday, holding steady after recent declines as the stock stabilised near its critical support level at RM1.84. The price action reflects early signs of a potential reversal, with the stock trading within a narrow range that suggests accumulating buying interest. The convergence of the 5-day SMA at RM1.89 and the 13-day SMA at RM1.96 establishes a critical pivot zone, reinforcing a cautiously optimistic near-term outlook.
• From a technical perspective, the formation of a doji candlestick reflects indecision in the market but also signals a potent ial shift in sentiment. The stochastic oscillator at 5.11 remains deeply oversold, indicating the possibility of a relief rally as selling pressure wanes. The Tom Demark Pressure Ratio (TDPR) at 29.53 further highlights easing downward pressure, creating a favourable setup for recovery. Additionally, the RSI at 36.29 indicates stabilising momentum, with a bullish divergence emerging as the RSI trends higher despite muted price movement, bolstering the case for a rebound.
• Immediate resistance is observed at RM1.89, aligned with the 5-day SMA. A breakout above this level could pave the way toward RM1.96, coinciding with the 13-day SMA, and potentially further to RM2.07, representing the 50-day SMA. On the downside, immediate support is situated at RM1.84, with further buffers at RM1.80 and RM1.72, providing robust protection against extended declines.
• For traders aiming to capitalise on a potential reversal, accumulating the stock between RM1.84-RM1.86 could provide an optimal entry point. A take-profit target at RM1.99 offers an upside potential of approximately 8.2%, while a stop-loss at RM1.72 limits downside risk to around 7.0%. This setup presents a balanced risk-reward profile, appealing to traders anticipating a technical rebound in DIALOG's price trajectory.

Source: Kenanga Research - 3 Dec 2024