Bull Trap

A bull trap is a false signal that makes a stock look like it's about to rise, but then it drops instead. You'll hear this term when analyzing price charts and market momentum—it matters because falling for one can cost you real money. The trap happens when a stock breaks above a resistance level (a price point where it usually gets pushed back down), attracting buyers who think the uptrend is real. But the buying pressure fizzles out, and the price reverses sharply downward, leaving those new buyers holding losses. For example, if TechCorp stock breaks above $50 and climbs to $52, only to crash back to $45 the next week, that initial breakout was a bull trap. Spotting these requires patience and watching for weak volume or other warning signs.