Bear Trap — Trading Wiki

Publisher and editorial transparency

Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What Bear Trap means

A retrospective label for a move below selected support followed by an upward reversal. The price path alone does not establish short positioning or deliberate manipulation.

In depth

A bear trap is a retrospective description of a move below a chosen support area followed by an upward reversal. It need not reveal intentional manipulation or the actual location of short positions. A short seller can lose if the repurchase price rises, but the existence and size of short covering require separate evidence. State the price interval, support criteria and reversal window before collecting examples. Include declines that continue as well as rebounds. TradeHQ cannot open a short position, so any short-sale comparison must be a separate hypothetical worksheet.

Key points

• False breakdown below support that reverses sharply upward
• Can cross intended exit levels; a price pattern does not establish deliberate intent
• A rebound can occur, but its size and cause are not established by this label

Why it matters when you are learning

Define the chosen support level before reviewing the later candles. A close below that level can still be followed by a recovery; waiting is not guaranteed protection.

Worked exercise and its limits

Sketch a move below a chosen $40 level to $38, followed by a rebound to $42. Explain why hindsight permits the label but does not identify deliberate manipulation. A short-sale example must remain on paper; TradeHQ does not short assets.