To determine whether a "bear trap" has occurred, it is necessary to comprehensively analyze the overall situation of the current market, the trend of technical indicators, and changes in trading volume.
What is a "bear trap"?
In simple terms, a "bear trap" is when the market makers deliberately cause prices to drop in the short term, creating panic and scaring retail investors into selling their holdings. Then, the market makers take advantage of the situation to buy in at a low price, preparing for a subsequent rise.
Characteristics of a bear trap:
Prices quickly drop below key support levels: On the surface, it seems like the market is going to crash, but it quickly rebounds.
Changes in trading volume: Trading volume increases during the decline, while the volume will significantly increase during the rebound, indicating that large funds are buying in at low levels.
In simpler terms:
A bear trap is like scaring people; the market makers intentionally use short-term declines to pretend that the market is deteriorating, with the goal of getting retail investors to sell at a low price. To determine if it is a bear trap, one can observe whether the price quickly drops and then bounces back, as well as whether there are abnormal changes in trading volume.
