Yesterday, Dialog experienced a major breakdown when itviolated the 200-day MAV line. The significance of this moving average line tothe stock is clearly  highlighted in thedaily chart below. A sell signal was  triggered yesterday and the breakdownis expected to drag its share price down to the RM2.10 level, or even theRM1.96 and RM1.82 levels, unless the stock stages an immediate rebound backabove the MAV line and render yesterday's price action a fake breakdown.    

The 200-day MAV line has played a significant role indetermining Dialog's near-term price movement, as its importance is highlightedin the above daily chart. In Sept 2011, its share price tumbled after  it violated the  200-day MAV line. In the months thatfollowed, Dialog made  five failedbreakout attempts at this moving average line. When it eventually pierced throughthis 200-day MAV line in Dec 2011, strong breakout gains  followed. And when the stock wasconsolidating those breakout gains, it also found support at the moving averageline.

It is clear that market participants are watching the200-day MAV line closely. Hence, yesterday's violation of the moving averageline represents a major breakdown, which is expected to drag the share price tothe next strong support floor at RM2.10. Should this level be taken out aswell, we are eyeing the RM1.96 and RM1.82 levels as the next downside targets. Havingsaid  that, we still do not rule out thepossibility of a fake breakdown as the yesterday's breakdown led to only a slightlymore than 2% loss and the 200-day MAV line has been violated for just a day.

If yesterday's breakdown was genuine, Dialog's its shareprice is likely to drop to the RM2.10 support floor. Expect another round ofstrong selling pressure should the RM2.10 level be violated, after whichadditional supports lie at the RM1.96 and RM1.82 levels. The 200-day MAV linewhich now lies at the RM2.32 level is the immediate tough resistance, whileanother tough  one lies at RM2.52. Thestock's near-term technical outlook will be firmly bearish at any price  below the 200-day MAV line.