Bull Trap

A bull trap is a false signal that a stock's price is about to rise, when it's actually about to fall. You'll see the price climb above a key resistance level (a price point where it typically gets pushed back down), which tricks optimistic investors into buying. Then the price suddenly reverses and drops, leaving those buyers with losses. It matters because recognizing bull traps helps you avoid buying at the worst moment. For example, if TechCorp stock breaks above $50 for the first time in months, it might look like a breakout—but if it quickly falls back below $50 and keeps dropping, that was a bull trap. The key is patience: wait for confirmation that a price move is real before jumping in.