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A Wealth of Knowledge

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Bear trap

Bear trap occurs when the market breaks below a significant support giving the illusion that the prices will drop further, Generating a sell signal for break out traders, who will then learn that the market was only testing the support and has not really broke it. It is called a "bear trap" because it gives of the impression that the market has broke the support but only to find that it was only testing it, because it then reverses.

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