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Bull Trap Meaning

A bull trap is a deceptive market movement where an asset appears to break out into an uptrend but quickly reverses and continues downward. Bull traps are designed-intentionally or naturally-to lure buyers into long positions before selling pressure resumes.

Bull traps commonly occur during:

Traders may mistake a temporary price bounce for a genuine trend reversal. Once buyers enter, sellers regain control, forcing prices lower and trapping bullish participants in losing positions.

To reduce exposure to bull traps, traders often wait for confirmation through sustained volume, higher highs, and alignment with broader market structure rather than reacting to single price movements.

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