Bear Trap

A bear trap is a false signal that makes a stock look like it's falling, tricking investors into selling—only to watch the price bounce back up. You'll hear traders talk about this when analyzing price charts and support levels (the price floor where a stock tends to stop dropping). It matters because falling for a bear trap can lock you into losses right before a recovery. Think of it like this: TechCorp stock drops below $50, everyone panics and sells, but then it rebounds to $55 the next day. Those who sold at $48 got trapped. Bear traps happen when big price dips don't reflect real bad news—just temporary weakness that reverses quickly.