Key takeaways:
A bear trap refers to a false technical indication of a reversal from an uptrending market to a down-trending market.
Bear traps occur in all asset markets including currencies and cryptocurrencies.
Bear traps can manifest as a form of downside market correction within an overall bullish move higher.
While it’s a difficult proposition for novice traders, they can use charting tools to recognize a bear trap.
Introduction
A bear trap refers to a technical pattern that forms when the price action of a stock or any other financial instrument incorrectly signals a reversal from an uptrend to downtrend. In simpler terms, the prices may move higher in a broad-based incline. It then encounters significant fundamental resistance or change, prompting bears to open short positions.
In the cryptocurrency market, a bear trap generally involves several traders who have a significant amount of combined cryptocurrency holdings. They can plan to sell a large amount of a par
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