A breakdown below support that reverses sharply, trapping short sellers and stopping out longs just before the rally.
A bear trap is the downside fakeout. Shorts who entered on the breakdown must cover as price reverses, and their buying fuels the move higher. It is often the same event as a stop-hunt below an obvious low.
Example: a stock breaks $50 support, trades to $48.90, then reverses to $54 by the close. The shorts from $49.50 covering at $52 are the fuel.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Support, resistance and the flip. Support is a price where buyers keep stepping in and the fall stops; resistance is a price where sellers keep stepping in and the rise stops. Once price closes above an old ceiling, that same level often acts as the new floor.
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