A breakout above resistance that fails quickly, trapping buyers who chased it above a level that now becomes resistance again.
A bull trap is a fakeout to the upside. Buyers who entered on the break are underwater within minutes or hours, and their stop-loss orders add to the selling.
Waiting for a retest or requiring relative-volume confirmation reduces exposure to traps at the cost of missing some real breakouts.
Example: a stock clears $100 for the first time in a year, prints $101.80, then closes the day at $97.50. Everyone who bought above $100 is trapped.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Breakout and retest. Price stalls under the same level several times, pushes above it, then drops back to touch it from above before carrying on. That touch is the retest, where the old ceiling is tried as a floor. A break that falls straight back under it is a false breakout.
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