A break above resistance or below support that snaps back almost instantly and reverses. The anatomy of a failed breakout, and how to fade it using the trapped side's stops.
A bull trap is when price breaks above resistance, convinces everyone it is a breakout, then snaps straight back into the old range and falls. The bulls who jumped on the break are left holding the high. Because it is the bullish side that gets caught, we call it a bull trap.
A bear trap is the mirror image. Price breaks below support, convinces everyone it is a breakdown, then snaps back up. The bears who shorted the break are left short at the low and get squeezed higher.
Both are the same single phenomenon. Price appears to clear a level, but on a closing basis it never holds, and it reverses back across the line. It is a failed breakout. A trap is not just noise. The stops of the trapped side become fuel for the move in the opposite direction. That is why the reversal after a confirmed trap is often faster than a genuine breakout.
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