The bear trap is a sudden downward price movement that entices bearish investors to sell an investment short, followed by a price reversal back upward. As prices rise, short sellers lose money, which may trigger a margin call or force them to cover their position by buying back borrowed shares.
Bear traps are caused by a drop in price below a key support level, not just downtrends. A break downward through a resistance level is expected to result in further downward movement by bearish investors or traders. After the price reversal back upward, they are "trapped" and lose money.

A bear trap is a false technical signal in financial markets where the price appears to break below a key support level, suggesting a downtrend, but quickly reverses upward. This move traps bearish traders who enter short positions expecting further declines. When the price snaps back above support, short sellers are forced to cover, adding buying pressure and accelerating the rebound.

Bear traps often occur during strong uptrends or consolidation phases, driven by low liquidity, stop hunting, or misleading news. Traders can avoid bear traps by waiting for confirmation, monitoring volume behaviour, and combining support breaks with broader trend analysis, rather than reacting to a single price move.