Bear and Bull trap
Bear and Bull traps are situations where market movements deceive investors into making decisions that are not in their best interest. These are also defined as implicit manipulations or pressure.
In the crypto industry, a bull trap is a situation where investors believe that the price of a cryptocurrency will rise and decide to buy, but in reality, the price falls. A bull trap is characterized by a sudden and sharp increase in purchase volume, followed by a rapid decline in the crypto's price.
In contrast, a bear trap is a situation where investors believe that the price of a cryptocurrency will fall and decide to sell, but the price rises. Characteristics of a bear trap can include a sudden increase in selling volume followed by a rapid increase in the crypto's price.
Observing and studying the charts and patterns is essential to recognize bear and bull traps.
Usually, a bull trap occurs during a bullish trend when the price is pushed below the trend line (called the support) to make it look like the line would be broken; instead, the price goes back up within the same candlestick. Impatient traders would have jumped into the trade as soon as it broke the trend line, and thus, they would have gotten trapped.
The same thing happens for a bear trap but on the downside. Investors who bought too early did not enter the right time and will suffer a new low.
