Glossary · from the DESK dictionary
Bull Trap
A false buy signal that lures traders into long positions right before the price reverses downward.
In plain words
The price appears to break out upward, but then quickly reverses — long traders get 'trapped'.
In more detail
The bull trap mirrors the bear trap: a breakout above a watched resistance attracts buyers, finds no follow-through and falls back into the range — the breakout buyers sit at a loss and turn into sellers on the way down. It typically forms at obvious levels (prior day high, round numbers, multiple highs) where both breakout orders and shorts' stops cluster. What is tradable is less the breakout than its failure: the drop back below the level after fading momentum above it is the signal, and the trapped long side supplies the path lower.
Example
A stock breaks above the triple-tested high at 84.00, rises to 84.60 on fading delta and falls back below 84.00 two hours later. The short on the failure (stop above 84.60) targets the middle of the range — the capitulating breakout buyers deliver the path there in one move.
What it means for traders
An important concept for understanding false breakouts in technical analysis.
Common pitfalls
Can cause fast, painful losses for long positions that fell for the false breakout.
Related terms
Bear Trap · Resistance
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.