A bull trap is a false signal that indicates a rising market or asset price, leading traders to believe that a downtrend has reversed and an upward trend has begun. It "traps" bullish investors by convincing them to buy into the asset, only for the price to soon decline again, resulting in potential losses. Here’s how it typically happens:

1. **Downtrend**: The market or asset is in a downtrend, with prices steadily falling.

2. **Rebound**: The price starts to rise, creating the illusion that the downtrend is over and a new upward trend is beginning.

3. **Breakout**: The price breaks through a key resistance level or technical indicator, attracting more buyers who believe the upward trend is confirmed.

4. **Reversal**: Shortly after the breakout, the price reverses and falls back down, continuing the original downtrend. This traps the bullish investors who bought in during the false breakout, leading to potential losses.
Bull traps can be particularly deceptive because they exploit the natural optimism of traders looking for opportunities in a bear market. To avoid bull traps, traders often use additional technical analysis tools, such as volume indicators, to confirm the strength of a breakout before committing to a trade.