Dollar General Stock Drops 3.84% as Bearish Technicals Signal Further Weakness

Dollar General (DG) shares declined 3.84% to $104.55 in the latest session, marking the second consecutive day of losses with a cumulative two-day drop of 4.33%. This analysis examines technical indicators to assess the stock's current position and potential trajectory.
Candlestick Theory
Recent candlestick patterns reveal significant bearish momentum. The stock formed a Bearish Engulfing pattern on August 29, 2025 (high: $113.82, close: $108.76), followed by persistent downward pressure. The September 9 close near the session low ($104.55 vs. daily low: $104.36) signals continued weakness. Key support now emerges at the $104.36 recent low, with resistance firmly established between $108.30 (September 9 high) and the psychological $110 level, reinforced by repeated rejection at this zone over the past five sessions.
Moving Average Theory
The moving average configuration indicates a bearish bias. The 50-day MA ($109.50) crossed below the 100-day MA ($110.80) in August and remains under the 200-day MA ($110.20), confirming a death cross pattern. Current price action ($104.55) trades notably below all three key moving averages, with recent rallies stalling near the 50-day MA, suggesting its role as dynamic resistance. This alignment signals sustained downward momentum across short, medium, and long-term timeframes.
MACD & KDJ Indicators
MACD (12,26,9) resides in negative territory with a bearish crossover persisting since late August, indicating no immediate reversal signal. KDJ metrics reflect oversold conditions, with the K-line (15) and D-line (23) both below 20. While this hints at potential exhaustion, the MACD divergence suggests downward momentum may not yet be spent. Notable bearish agreement exists between both oscillators, though the KDJ oversold signal warrants monitoring for potential mean-reversion catalysts.
Bollinger Bands
Volatility has expanded with bands widening during the recent decline, culminating in the price touching the lower Bollinger Band ($103.80 estimation) on September 9. This marks the fifth lower-band test since late August, indicating persistent selling pressure. Historically, such consistent lower-band proximity precedes short-term rebounds, but failure to sustain recoveries in mid-August underscores underlying weakness. Band contraction remains absent, supporting sustained directional momentum.
Volume-Price Relationship
Volume trends validate bearish conviction. The September 9 sell-off occurred on 4.37M shares traded, significantly above the 30-day average (~3.2M), confirming institutional distribution. Down days since August 28 have consistently featured higher-than-average volume, while recovery attempts (e.g., September 5 +0.77%) saw volume contract 30% below average. This volume asymmetry reinforces the downtrend's technical legitimacy.
Relative Strength Index (RSI)
The 14-day RSI (28.5) has entered oversold territory (<30), approaching levels last seen during the July 2025 decline. While this suggests potential exhaustion, RSI remained under 40 throughout August’s failed recovery, demonstrating its limited reliability as a standalone reversal indicator in entrenched downtrends. Consecutive closes below 30 would heighten reversal prospects.
Fibonacci Retracement
Applying Fibonacci levels to the recent swing high ($113.82 on August 29) and swing low ($104.36 on September 9) reveals critical retracement zones: 23.6% ($106.71), 38.2% ($108.10), and 50% ($109.09). The price faces immediate resistance at the 23.6% level, coinciding with the September 8 low ($107.26). Failure to reclaim $106.71 would signal bearish continuity, while a breach above the 38.2% level would support reversal potential.
Confluence and Divergence
Notable confluence of bearish signals appears at $106.70–107.50, aligning the 23.6% Fibonacci level, September 9 high ($108.30), and recent resistance cluster. Conversely, bullish divergence emerges as KDJ and RSI oversold conditions contrast with new price lows, though this lacks confirmation from MACD or volume. Bearish consensus across trend-following indicators (MAs, MACD, volume) outweighs nascent oversold readings. The breakdown below key psychological support at $105.00 raises downside risk toward the $100.00 threshold if sellers maintain control.