Bull trap

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«What a man does not understand, he does not possess.»
(Wolfgang Goëthe)


A bull trap is a false upward movement that temporarily pushes price out of a congestion area. Investors buy shares on the congestion breakout, but then price quickly reverts itself going back again under the level that was earlier violated.

Candlestick analysis provides quite a good help in qualifying the nature of price movements and it proves to be very useful in pinpointing bull traps.

Bull trap.png

See also: