Atwal (70,68,68) moved to seven-under 206 to emerge as the best among the six Indians who made the cut at the event co-sanctioned by Asian and Japan Tours.
Atwal improved from his overnight T-13 and is now only four shots behind the leader, Frenchman Lionel Weber (66).
He shares the sixth place that also includes 2016 Myanmar Open champion Shaun Norris of South Africa.
Among other Indians, Gaganjeet Bhullar (66) had the best Indian card of the day and he also made a big jump from overnight T-51 to T-12 with one more round to go.
Ajeetesh Sandhu shot a third straight 70 and is now three-under 210 and T-18, up from T-34 overnight, while Jyoti Randhawa (71) is T-44 and Shiv Kapur (73) and Rashid Khan (72) are T-51.
Atwal's sole bogey came on the first after which he birdied the fourth, 11th, 12th and 16th for his 68.
Bhullar, on the other hand, had six birdies, three on either side of the turn and only one bogey on 16th in his 66.
Sandhu was three-under for his first nine, the back nine of the course and one-over for the next nine.
"I like the laid-back attitude here in Myanmar and I love the golf course here. I want to win tomorrow as my goal has always been to win."
Atwal won the Asian Tour Order of Merit in 2003 and also made history by becoming the first Indian golfer to win on the US PGA Tour in 2010. Atwal's last win on the Asian Tour came in Dubai in 2014.
Weber, 27, was in his elements as he tamed the challenging greens at the Pun Hlaing Golf Club with his three-day total of 10-under-par 203 to take a slender shot lead over Japan's Yusaku Miyazato.
Miyazato, who played in the final group last year, will head into his final 18 holes in the same group again as he aims to break into the world's top-50 with a strong finish here.
Miyazato topped the money list on the JGTO with his four victories last year. He is currently ranked 54 in the world.
Disclaimer: No Business Standard Journalist was involved in creation of this content
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