Bull Trap
False upside breakout trapping buyers before a bearish reversal.
Beginner-friendly explanation
A bull trap is the opposite of a bear trap: it’s a false bullish signal. Price breaks above resistance, traders buy, but price quickly drops again. Buyers end up “trapped”.
Example:
Ethereum breaks above $2,000, everyone buys, but it quickly falls back to $1,850.
Intermediate-level insight
Bull traps form at major resistance zones. The breakout attracts buyers (breakout traders), but the market lacks strength. The next candle invalidates the breakout — often with low breakout volume and a sharp rejection.
Example:
A false upside range breakout with low volume, followed by a quick return into the range with a bearish marubozu, signals a bull trap.
Advanced perspective
Bull traps are often engineered by smart money to trigger seller stops, then sell into those levels. They can be anticipated through bearish divergence (RSI, MACD), waning momentum, or unbalanced volume profile. Multi-timeframe analysis is crucial to confirm them.
Example:
On BTC, a daily breakout above key resistance, with no volume and MACD divergence on H4, followed by sharp rejection: classic distribution bull trap.
Technical & Chart Analysis
bull trap, false breakout, resistance, rejection, divergence, distribution, smart money