Bull Trap

A Bull trap is the phenomenon when the price of the coin starts to move high but suddenly declines and reverses. These are false market signals which can occur with any investment asset showing a strong long-term downward trend. It is also referred to as a false signal where the asset seems to recover after its downtrend but is actually declining further.

The traders are often enticed when they see the price of the asset surpassing their previous support zones, thereby causing the investors to open long positions. They are deceptive indicators creating a dire situation for the market players therefore the name “trap”. This is one of the reasons why traders must be cautious of sharp reversal patterns.