Bull Trap

A Bull Trap is a false bullish signal in a bearish market. In practice, this rise in price may suggest that the asset is entering a bullish phase (characterised by a positive trend), prompting investors to buy. The market, after an even sustained ascent, however, returns to a bearish trend, ‘trapping’ within it investors who were hoping to profit. 

It is no coincidence that the term Bull Trap refers precisely to the Bull Market, a financial market characterised by a strong positive trend.

The opposite of the Bull Trap is the Bear Trap, which takes its name from the Bear Market. The substantial difference between Bear Trap and Bull Trap lies in the market trend taken into consideration and the type of false signal: in a Bear Trap, the bullish market undergoes a downward trend reversal that leads investors to sell assets, thus causing them to miss out on potential future profits. 

How to recognise a Bull Trap? There is no foolproof method, but in general it is important to carry out a careful technical analysis of the market and learn to recognise bull traps from past situations. For example, they can be identified by carefully evaluating the trading volume associated with the asset, i.e. the sum of the quantities sold and bought over a certain period of time. When an asset is actually in a bullish phase, institutional or expert investors are more likely to enter the market in a timely manner, leading to an increase in volumes. If, on the other hand, volumes remain unchanged or change little during the price rise, this could be a trap.   

If you are still uncertain whether you’re facing a Bull Trap or not, you can consider another indicator: momentum. This value analyses the change in a market’s prices over a certain time frame and helps determine which trend it might follow in the future. In a nutshell, it is a technical indicator that helps you understand whether the asset price will go up or down. This means that if the price of an asset rises but the momentum remains unchanged, we could be facing a Bull Trap. Usually, in a clearly bullish market, the value of momentum indicators increases along with the price. 

There are other technical analysis tools that may or may not confirm the presence of a Bull Trap. In any case, the golden rule to avoid it is not to get carried away by your emotions: if the value of an asset rises suddenly, it is essential to analyse the market with a clear head, without getting caught up in FOMO (Fear of Missing Out) and taking hasty actions. 

Correlated words


Indicator that calculates the difference between the maximum and minimum price of an asset over a specific time period.

Floor price

The minimum price at which an asset can be purchased.

Bitcoin Dominance

The percentage ratio between Bitcoin's market cap and that of the entire crypto market.


Two currencies traded against each other on a crypto or forex exchange

Price action

The behaviour of the price of a financial instrument over time.

Relative Strength

A chart describing the performance of a pair of cryptocurrencies by comparing their price performance.


In a price chart, the breaking of a resistance or support leading to an increase in volatility and trading volumes.

Bull Run

Market phase characterised by a bullish trend, associated with positive investor sentiment.


A sudden and rapid rise in the price of an asset or market index, caused by increased demand from investors.


A market situation in which the observed price trend is different from that predicted by an investor, falsifying their expectations.

Market Mover

A factor capable of influencing the development of a market and the level of prices.

Mutual Funds

Mutual funds are financial instruments that combine the capital of several investors into a single asset.

Bear Trap

In a bullish market, a Bear Trap is a downward price movement that can confuse investors.


In economics, volatility indicates the variation of the price of a financial instrument through time.

Supply and demand

In economics, supply and demand correspond to the two main market variables and describe the behaviour of those who buy and sell goods or services.


The amount of currency traded in a given period.

Market Trend

A perceived tendency of financial markets to move in a particular direction over time.


Trading is a speculative activity of buying and selling financial assets, with the goal of making a profit.

Stop Order

A trading order that allows you to set a price at which another order is triggered.


The difference between the execution price of an order and the price entered in the order.

Support and resistance

Support and resistance are two technical analysis tools used to monitor the price trend of an asset.


A value that measures the return generated by an investment.


A strategy that inflates the price of a cryptocurrency to generate profits only for those who implement it.

Prediction Market

Exchange-traded markets created for the purpose of trading the outcome of events.

Order Book

The list of all the prices at which traders are willing to trade a certain amount of cryptocurrency on an exchange.


A service that collects data not available on blockchain, verifies it and provides it to smart contracts


When the price of a cryptocurrency rises very fast, they say it soars 'to the moon'.

Market Order

Instant buy or sell at the next best price available on the market.

Market Maker

Companies or organised entities that, in partnership with an exchange, are always willing to buy and sell a cryptocurrency.

Market Cap

The total value of all the coins or tokens of a cryptocurrency in circulation.

Limit Order

A buy or sell order that is executed only when the cryptocurrency reaches the set price.

Futures Contract

A contract that regulates the execution of a transaction at a predetermined price on a specific date.


Fear, Uncertainty and Doubt refers to a negative market sentiment

Circulating Supply

The number of units of a cryptocurrency available on the market.


The Foreign Exchange Market allows fiat currency trading.


Fear Of Missing Out is an expression often used in the context of trading and cryptocurrencies.


ETFs are passively managed investment funds that replicate the value of a reference index called a benchmark.

Buy Wall and Sell Wall

High number of purchases or sales demanded at a certain price.

Bull Market

A market where there is an upward price trend

Break-Even point

The balance point between losses and gains, income and expenditure.

Bid and Ask

In the order book, these are the prices at which an asset is offered or demanded.


A standard for measuring the performance of a financial instrument or market.

Bear Market

A market phase characterised by price lows.


Acronyms used to indicate the maximum and minimum price of a cryptocurrency.

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