Bear trap


What is a Bear trap?

Bear trap commonly appears during strong upward trending movements, and it represents a technical pattern that gives false bearish signals and potential reversal in the trend. A price decrease might initiate a bear trap, stimulating market participants to enter short positions and push the price further. Ultimately the price bounces back and returns toward the original uptrend while the holders of short positions end up with trading losses.

It is sometimes stated that crypto whales might induce a bear trap by selling a larger quantity of their crypto holdings to push the price down. The whales anticipate that the price action will stimulate other participants to take short positions or sell their holdings. Afterward, the whales will buy the relevant crypto at a lower price before the price returns to the initial upward movement.

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