Ericsson Shares Slide 4.1% As Technical Indicators Flash Bearish Signals

Introduction to Current Trading Conditions
LM Ericsson Telephone (ERIC) closed at $8.19 on 2025-07-09, declining 4.10% and extending its two-day loss to 4.21%. This recent weakness forms the backdrop for the following technical assessment, which integrates multiple frameworks to evaluate potential trends and reversals.
Candlestick Theory
Recent candlestick patterns reveal bearish dominance. The July 9 session generated a long red candle with a high of $8.52 and low of $8.12, closing near the session low ($8.19). This follows a July 8 doji-like candle (high: $8.62, low: $8.52), indicating indecision preceding the breakdown. Key support emerges at $8.12–$8.15, aligning with the June low, while resistance consolidates at $8.52–$8.55 (recent highs). A sustained break below $8.12 could accelerate selling.
Moving Average Theory
The 50-day moving average (MA) near $8.30 has turned downward, reflecting short-term bearish pressure. Prices breached this level decisively on July 9. Conversely, the 200-day MA (approx. $7.75) maintains an upward slope, supporting a longer-term uptrend. The 100-day MA at $8.15 aligns with the identified candlestick support, creating a technical confluence zone. Death cross risk persists if the 50-day MA crosses below the 100-day MA.
MACD & KDJ Indicators
MACD (12,26,9) confirms bearish momentum, with the signal line crossing below the MACD line in negative territory. Histogram bars are expanding downward, reinforcing weakness. KDJ (14,3,3) shows the %K line (27.5) crossing below %D (41.8) within oversold territory (<30). While KDJ suggests potential oversold exhaustion, MACD’s bearish alignment advises caution against premature reversal calls.
Bollinger Bands
Bollinger Bands (20-day) have contracted significantly, with bandwidth narrowing to 4.7%, signaling low volatility and impending directional bias. Price closed below the lower band ($8.28) on July 9 – typically an oversold signal. However, a prolonged break below the lower band may instead indicate continuation weakness. A mean-reversion bounce would need to reclaim the 20-day SMA ($8.42) to validate recovery potential.
Volume-Price Relationship
Recent distribution days highlight bearish volume confirmation. July 9’s decline occurred on elevated volume of 32.36M shares (vs. 14.60M on July 8). This selling climax diverges from the muted volume during the July 3–7 consolidation phase. Volume spikes on down days (e.g., June 13, July 9) signal institutional distribution, undermining sustainability of rallies lacking commensurate buying volume.
Relative Strength Index (RSI)
The 14-day RSI (37.8) approaches oversold territory (<30) but remains above warning levels. Notably, RSI formed a bearish divergence: prices reached higher highs in late June ($8.68), while RSI peaked lower. This foreshadowed the current pullback. An RSI break below 30 would strengthen oversold signals but requires price confirmation for reversal validity.
Fibonacci Retracement
Applying Fibonacci to the primary uptrend from the April 10 low ($7.11) to the January 23 peak ($8.90) reveals key levels. The 38.2% retracement ($8.14) aligns with recent support near $8.12. A breach below targets the 50% level ($8.00), then the 61.8% ($7.86). Resistance clusters at the 23.6% retracement ($8.40), overlapping with the 50-day MA, creating a significant technical barrier.
Confluence and Divergence Synthesis
Confluence exists around $8.12–$8.15, where candlestick support, the 100-day MA, and the 38.2% Fibonacci level converge. A decisive break below this zone would activate bearish targets near $7.86–$8.00, supported by MACD/KDJ momentum and volume distribution. Bullish divergence is absent; instead, the RSI/price divergence in June warned of current weakness. While oversold KDJ and Bollinger Band proximity hint at near-term bounce potential, volume and MA resistance at $8.30–$8.40 suggest rallies may remain corrective unless accompanied by significant accumulation.