A "bear trap" occurs in financial markets when the price of an asset, such as a stock or cryptocurrency, temporarily drops, creating the illusion of a developing bearish trend. This drop can mislead traders and investors into thinking the asset's price will continue to decline, prompting them to sell or short the asset.

However, instead of continuing downward, the price unexpectedly reverses and begins to rise. Those who sold or shorted the asset in anticipation of further declines may find themselves incurring losses as the price recovers. This situation "traps" the bears—traders who bet on the price falling—forcing them to cover their positions at a loss.

Bear traps can occur for several reasons:

1. **False Breakdowns**: The price briefly dips below a key support level before reversing and moving higher.

2. **Market Manipulation**: Large traders or institutions might intentionally lower the price to trigger stop-loss orders or encourage selling, allowing them to buy back at a lower price before the price rebounds.

3. **Low Volume**: A price decline on low trading volume may lack the strength to sustain a downtrend, resulting in a quick reversal.

Bear traps can be challenging to navigate, as they often lead to significant losses for those unprepared for the sudden price reversal. To avoid falling into a bear trap, traders typically seek confirmation from other technical indicators before fully committing to a bearish position.

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