A Bull Trap is when the stock market gives a false signal and investors lose money because of it. It happens when there's a rally that breaks a support level from before. The move "traps" traders or investors that acted on the signal to buy and they make losses from the long positions they took. The market will often reverse and go back down, but the damage has been done, and the investors are left holding the wrong position.Some examples of bull traps in the stock market include the 1987 crash and the 2000 tech bubble. Both of these happened when investors acted on false signals and bought stocks at inflated prices. The market would go up, but it was never going to go as high as the people thought, so it would eventually come back down. A bull trap is when investors believe a stock is going to rise, but it actually falls. This price pattern may also be referred to as a whipsaw pattern.
