Bull/Bear Trap

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Bull/Bear Trap

When a support level such as a swing low or a trendline is breached, the market often attracts fresh interest from buyers and sellers. The buy low crowd come in looking for value at previously cheap levels, while the breakout following crowd sell the breakout looking for an extension of the decline. If the downside break fails to see follow-through selling, frustrated short sellers cover their positions bidding the market up creating a whipsaw. The market advance is exacerbated by the 'wait and see' crowd who come in after most of the cards have been played. 

Some examples of the Bull and Bear Trap:

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