A bear trap occurs when an asset's price gives the false impression of shifting from an uptrend to a downtrend. Traders often get deceived when the price breaks below a significant support level, leading them to believe that a sustained bearish move is on the horizon. Reacting to this, many begin to sell their holdings, expecting the market to continue its decline.

Yet, shortly after this sell-off, the asset's price rebounds swiftly, catching these traders off guard. The market resumes its upward movement, leaving those who sold at a loss. This tactic is often employed by more seasoned traders to shake out less experienced participants or to accumulate assets at a temporarily lower price.

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