Bull Trap

A bull trap is a false signal that suggests an asset’s price will keep rising after a brief upward move, only for it to quickly reverse and fall. This can lure traders and investors to buy in, thinking a breakout is underway, but instead they end up stuck in losing positions. Bull traps happen when a rally lacks strong buying support above a resistance level—soon after, selling pressure increases, pushing prices back down and often triggering stop-loss orders. Savvy traders watch for warning signs and confirmation before entering to help avoid getting caught in a bull trap.