Bear trap
Also called: Downside fakeout, Failed breakdown, False breakout, Seller trap, Ayı tuzağı, Sahte kırılım
A bear trap is price dropping below support, pulling sellers in, then climbing back above the level; trapped sellers covering speeds up the rise.
4 min read · one puzzle on the page
What is a bear trap?
A bear trap is the support side of a false breakout. Price closes below a level that held for a long time, sellers who see the drop jump in, then price comes back above the level. Why breaks fail in general is on the false breakout page; here we look at those who sold below support and are now losing.
When support breaks, two groups act at once. Buyers who bought at support get stopped out and sell whether they want to or not. Sellers who were waiting for the break finally go in. The screen shows a strong down candle, but a good part of that candle is forced selling, not a new idea.
In the seller's head the scene is simple: support is finally gone and there is room below. When price starts to rise, they first call it a retest. Once a close above the level arrives, the position becomes a weight.
Where does the trapped seller's stop sit?
The stop on a short position is a buy order. Stops from breakdown sellers gather in two places. The first is just above the broken support, since getting out if the level is reclaimed is the easiest rule. The second is above the last high before the breakdown, where traders who stop by structure sit.
A stock example: support at 48.00, price drops to 47.20, then closes at 48.30. Some sellers had stops between 48.10 and 48.20, and that close took them out. If the last high before the break was 49.40, the second cluster is around 49.50.
That is why the rise after a bear trap is often faster than expected. A close above the level sets off the first cluster. Buyers stopped out at support step back in. As price nears the last high, the second cluster goes too. Sellers covering and returning buyers feed the same move.
For someone trading the trap from the long side, the invalidation is the breakdown low, 47.20. Buying at 48.30 with a stop at 47.10 risks 1.20, which is 1R. With the last high at 49.40 as a first target, the reward is 1.10 and the ratio is just under 1R. If the next resistance is 50.60, it rises to about 1.9R.
Try it on a chart
On this chart price has dropped below a support level. First think about where your stop would be if you had sold the breakdown. Then look at the low the breakdown made and which side of support the latest candles closed on.
Support broke, but price couldn't stay below it and climbed back above the level. What do you do?
No sign-up needed. Take a guess; when the chart opens, you'll see why.
The most common bear trap mistake
On the selling side, the most common mistake is selling at the bottom of the breakdown candle. Sell at the close of the long red candle that broke support, put the stop above support, and you have entered with a very wide distance. By the time price returns to the level, the trade is near 1R and inside the trap.
Second, adding to the short as price comes back. Selling more because the price is higher means defending a breakdown idea that is no longer valid. If a candle has closed above the level with a body, the sell idea is over, and the stop already says so.
On the buying side, the mistake is seeing a trap in every support break. Calling a bear trap the moment price closes below support and buying it is trying to catch a falling knife. The trap starts when price closes back above the level with a body. A buy before that close is only a guess.
When the bear trap read misleads
In a strong downtrend, a brief move back above support is often not a trap. Price tests the level from below, maybe closes one candle above it, then keeps falling. Seeing a bear trap in every bounce means buying against the trend again and again.
Looking for traps at vague levels misleads too. A bear trap runs on the stops piled up below support. Under a clear support tested many times there are plenty of them; under a small low in the middle of a range there are few, and the move back has little force.
On news candles and session opens, price can dip under support and come back within the same minute. Wait for a few closes before calling that a bear trap. A close back above on a lower timeframe may mean nothing yet on the chart you trade.
Frequently asked questions
How do you spot a bear trap?
If price closes below support but then fails to make a new low, leaves small candles with long lower wicks under the level, and finally closes back above it with a body, the picture has become a bear trap. A wick alone is not enough; wait for the close. The next candle also holding above the level makes it clear.
Where do sellers' stops build up in a bear trap?
Usually in two places. The first is just above the broken support, because getting out if the level is reclaimed is the most common rule. The second is a little above the last high before the breakdown. Since a short's stop is a buy order, the rise speeds up as these clusters trigger.
What is the difference between a bear trap and a liquidity grab?
Where the close lands. In a liquidity grab price spikes under support with a wick and the same candle closes back above; there is no close below the level at all. In a bear trap at least one candle closes below support with a body, sellers enter on that close, and the trap shows up in the candles after.
