Here's how to avoid getting caught in a 'Bear Trap' while trading

Unless a stock shows breakdown underneath the previous support level decisively, avoid it.

Simply put, a bear trap is a technical pattern that occurs when the performance of a stock or an index wrongly signals a reversal of a rising price trend. At times, such reversals instead turn into follow-up buying, thus trapping the sellers in their short positions. The psychology behind this whole process is called a “Bear Trap”. 

A breakout stock typically draws buyers, and, because of the uptrend, volumes get added. That said, there are traders and investors who mindfully watch such a move to capitalise on the profit booking move or a negative reversal. On several occasions, such a