Bull trap

How it plays out

• Price approaches a well-watched resistance level.
• A candle breaks above it; breakout buyers and short stops trigger.
• Follow-through buying is missing; price closes back under resistance.
• Trapped longs sell, pushing price lower.

Warning signs

Breakouts on falling volume, long upper wicks, bearish divergence on momentum indicators and breakouts in a broader downtrend are the classic tells. Waiting for a close above resistance, or a successful retest from above, filters many traps.

Traps are also why many traders scale in: a small starter position on the breakout, added to only after the retest holds, loses less when the breakout turns out to be false.

Where bull traps appear

They are common in bear markets, where rallies to resistance attract dip buyers, and around news events that spike price briefly. A bull trap that follows a steep fall is closely related to a dead cat bounce.

On BRVX

On BRVX both sides are available on every market, so a failed breakout can be read from either side of the order ticket. A long opened on a breakout needs its stop-loss back below the old resistance, set when the position is opened rather than after the trap has sprung.