Trading Traps
Bear Trap
A false breakdown downward that quickly reverses
A bear trap occurs when price breaks below a key support level, triggering selling, only to reverse sharply upward. It traps short sellers and panicked sellers in losing positions.
✓How to Recognize
- •Price breaks below key support
- •Volume is low on the breakdown
- •Quick reversal within 1-3 candles
- •Failure to continue lower after initial drop
⚡How to Avoid
- →Wait for confirmation candle close below support
- →Check if volume confirms the move
- →Look for retest of broken support as resistance
- →Avoid shorting at obvious support levels