Lloyds Shares Plunge 4.73% As Bearish Momentum Intensifies Below 50-Day MA

Lloyds Banking Group shares experienced significant selling pressure in the most recent session, declining 4.73% to close at £4.03. This marks the second consecutive down day, bringing the two-day loss to 5.18%, with increased trading volume suggesting growing bearish conviction among market participants.
Candlestick Theory
Recent price action shows a distinct bearish pattern, with the last two sessions forming large red candles indicating strong selling momentum. The candlestick on 2025-07-02 tested the psychological support of £4.00 (low: £3.98) but failed to recover significantly, closing near the bottom third of the day's range. This follows a failed breakout attempt above £4.27 resistance in late June, confirming this level as a near-term ceiling. The £3.98-£4.00 zone now serves as immediate support, while £4.25-£4.27 remains the primary overhead resistance after repeated rejection.
Moving Average Theory
The closing price of £4.03 now sits below the estimated 50-day moving average (~£4.15-£4.20), indicating weakening short-term momentum. However, the price remains above the calculated 100-day MA (~£3.95) and 200-day MA (~£3.60), preserving the longer-term bullish structure. The potential bearish cross forming between the 50-day and 100-day MAs would signal deteriorating medium-term momentum should the current sell-off persist.
MACD & KDJ Indicators
The MACD histogram appears to be contracting toward a bearish crossover, with the signal line poised to overtake the MACD line, suggesting increasing downward momentum. Conversely, the KDJ indicator shows the %K line at approximately 17.24 – deep in oversold territory – after the sharp decline. This divergence between MACD's bearish momentum and KDJ's oversold reading indicates heightened volatility and potential for a technical rebound, though the dominant bearish sentiment may delay recovery.
Bollinger Bands
The price is trading near the lower Bollinger Band after the recent breakdown, with volatility expanding sharply during the sell-off. Bandwidth expansion after the consolidation phase in late June signals a strong directional move. The close below the lower band (£4.03 vs estimated lower band ~£3.95-£4.00) may indicate oversold conditions, but sustained trading beneath this level could foreshadow additional downside.
Volume-Price Relationship
The past two sessions show concerning volume patterns, with 25M shares traded on 2025-07-02 – nearly double the 30-day average – confirming the bearish price move. This distribution pattern contrasts with the lack of volume support during the late-June consolidation, suggesting institutional selling. The increasing volume on down days implies bearish conviction, though capitulation-level selling may eventually provide a washout bottom.
Relative Strength Index
The 14-day RSI has plunged to an estimated 30-35 range after the recent decline, approaching oversold territory. However, it hasn't yet reached the sub-30 extreme that typically signals exhaustion. The swift descent without oversold readings in prior sessions suggests more room for downside. RSI divergence appears absent as new price lows correspond with new RSI lows.
Fibonacci Retracement
Using the swing low of £3.805 (2025-05-12) and swing high of £4.29 (2025-05-27), key Fibonacci levels emerge. The current price sits below the 23.6% retracement at £4.10 and is testing the 38.2% level at £3.99. This £3.98-£4.00 zone aligns with the recent price low and represents a critical support confluence area. A decisive break below £3.98 would expose the 50% retracement at £3.92, while resistance forms at the 23.6% (£4.10) and the 0% level (£4.27).
Confluence & Divergence Observations
Multiple indicators converge at the £3.98-£4.00 zone, including Bollinger Band support, the 38.2% Fibonacci level, and psychological price support – making this a critical defensive line for bulls. Notable divergence appears between momentum oscillators: KDJ signals oversold conditions while MACD shows building bearish momentum. Volume confirmation of price breakdown increases credibility of the bearish move, though oversold readings warn of potential technical bounce. The conflict between short-term bearish momentum (price < 50MA) and longer-term bullish structure (price > 100/200MA) suggests possible rangebound consolidation between £3.95-£4.15 near-term.