A bull trap occurs when traders take a long position on a promising setup and then have price reverse and move lower very sharply. This pattern is called a ‘trap’ because the traders were tricked into a long position with usually very obvious bullish signals as we will see later. Bull traps often happen around previous highs where it looks as if price is continuing the rally. Especially amateur traders often tend to enter too early around such key levels (read about FOMO here). It’s especially dangerous if price rallies for a bit and trapped traders see some profits because they feel too secure. When price then ... (full story)