Bull Trap

A bull trap is a false bullish breakout: the price of an asset moves convincingly above a resistance level, drawing in buyers who expect a sustained rally, but the move quickly fails and the price reverses sharply downward. Traders who entered during the breakout are left holding losing positions as the market resumes its prior downtrend.

Bull traps tend to form when a small group of aggressive buyers pushes price through resistance on thin volume, while broader market demand fails to follow through. Larger holders then sell into that strength, collapsing the move. The clearest warning signs are low volume during the breakout candle, weak follow-through price action, and a failed retest of the former resistance level as new support. Bearish divergence on momentum indicators such as the RSI or MACD can also signal that the breakout lacks conviction. Protecting against a bull trap means waiting for a confirmed retest, using tight stop-losses, and combining technical signals with fundamental context before entering a long position. For a deeper breakdown, see our full guide on bull traps.