Bull Trap / Bear Trap
Looks like it's rising then falls — a bull trap; looks like it's falling then rises — a bear trap. False signals that make a trend reversal appear to happen.
Bull trap = looks like an upside breakout, draws in buying, then falls (buyers get trapped)
A breakout or breakdown on weak volume is often seen as a possible trap.
In plain terms
A bull trap is when the price pokes slightly above, as if to say "now it's going up!", traps the people who bought in, and then falls again. It's a trap where you're caught by being fooled by the bull (rise).
A bear trap is the opposite. It slips down as if to say "now it's falling!", scaring people into selling, then soon rises again and leaves the sellers frustrated. It's a trap where you're caught by being fooled by the bear (fall).
What it tells you
These expressions tell you that "a signal that looks like a trend change can be false." If you treat a brief breakout or breakdown as a real reversal and follow it, you can easily get hit by the opposite move.
So a single breakout or breakdown doesn't separate the real thing from a trap — volume and what happens afterward do.
Formula
Bull trap = looks like an upside breakout, draws in buying, then falls (buyers get trapped) Bear trap = looks like a downside breakdown, draws in selling, then rises (sellers get trapped)
What high or low means
A breakout or breakdown on weak volume is often seen as a possible trap. A genuine trend change usually comes with volume behind it.
That said, whether it was real or a trap only becomes clear after the fact. So one signal alone doesn't settle it.
Trading off a single breakout or breakdown on a chart makes it easy to get caught in a trap. A signal that moves briefly without volume can be deceptive in particular. (This is a concept explanation, not a suggestion to trade.)
Deciding in advance that "this is a trap" is risky too. You may mistake a real reversal for a trap and miss the move. In the end it shows up in the flow rather than in one signal.
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see SEC-filing-based financial metrics alongside the sector benchmark.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.