What's the Difference Between a Bear Trap and Bull Trap?

  • A bear trap or bull trap is a trading setup where the market falls or rallies significantly but fails to continue on its previous direction.
  • This trading pattern occurs most often in a downtrend or uptrend, but can also occur in an inflexion.
  • A bear trap is a type of trading setup in which the market falls or rallies significantly but fails to continue on its previous direction.

A bear trap is a type of trading setup where the market falls or rallies significantly but fails to continue on its previous direction. This trading pattern occurs most often in a downtrend or uptrend, but can also occur in an inflexion. A bull trap is a type of trading setup in which the market falls or rallies significantly but fails to continue on its previous direction. This can occur in either an uptrend or a downtrend.



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bear trap vs bull trap

Bear Trap vs. Bull Trap: An Overview

A bear trap happens when a stock price falls and bounces back up only to plunge again, trapping traders who thought they had bought near the bottom. A bull trap happens when a stock price rises quickly and plummets, luring traders into the market with hopes of profits.
A bear trap happens when a stock price falls and bounces back up only to plunge again, trapping traders who thought they had bought near the bottom. A bull trap happens when a stock price rises quickly and plummets, luring traders into the market with hopes of profits.

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Bear Trap

A bear trap is a situation in which investors anticipate a sharp decline in the price of a stock market, commodity, or currency, only to see a V-shaped recovery.
Bull Trap
A bull trap is a situation when investors anticipate a sharp increase in the value of a stock market, commodity, or currency, only to see a sharp decline.

Bull Trap

A bull trap is the opposite of a bearish engulfing pattern. It occurs when a stock or index is trading in a strong uptrend and then suddenly reverses course. This reversal can occur in a strong uptrend, which can make it less reliable than an uptrending engulfing pattern.



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Key Differences

Bear and bull traps are related, but they are not identical. Bear traps are set up when prices fall sharply on a high volume day. Bull traps are set up when prices rise sharply on a high volume day.
Bear traps are setup when the market's momentum is downward. A sudden reversal in the opposite direction indicates that traders have stepped in and triggered the bear trap. Since a high volume day is bearish, traders are filtering out the noise, reacting quickly, and triggering the trap.
Bull traps are set up when traders are buying heavily, believing prices will rise. When prices do rise, the market's momentum is upward. A sudden reversal indicates a reversal in momentum, and traders are selling. A high volume day is bullish, so traders are filtering out the noise, reacting quickly, and triggering the trap.