BullđđTrap vs Bearđ»đ»Trap
1. Bullđđ Trap:
A Bull Trap occurs when the price of an asset briefly rises, signaling a potential upward trend, leading traders to believe the market is turning bullish.
Trap: After traders buy into the rally, expecting the price to continue rising, the price reverses and declines, causing losses.
Example: A stock or cryptocurrency breaks above a resistance level, but soon after, it drops back below that level.
2. Bearđ»đ» Trap:
A Bear Trap occurs when the price of an asset briefly drops, signaling a potential downward trend, prompting traders to sell or short the asset.
Trap: After traders sell, expecting further declines, the price reverses and starts rising, catching short-sellers off-guard and forcing them to cover their positions at a loss.
Example: A stock or cryptocurrency falls below a support level, only to quickly rebound and rise again.
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