A bull trap means a reversal that forces market participants who are on the wrong side of the price movement to close positions with unexpected losses.
Bull traps occur when buyers fail to sustain a rally above a breakout level.
Traders and investors can reduce the frequency of bull traps by looking for confirmation after breakouts through technical indicators and/or pattern divergences.
The Accumulation/Distribution Line (A/D) measures the supply and demand of an asset or security by looking at where price closed in a period range and then multiplying that by volume.
A bullish engulfing pattern is a candlestick pattern that forms when a small black candlestick the next day is followed by a large white candlestick whose body completely overlaps or engulfs the body of the previous day’s candlestick.
Capitulation occurs when a significant proportion of investors give in to fear and sell within a short period of time, resulting in a sharp drop in the price of a security or market against a backdrop of high trading volume.
Consolidation is a technical analysis term used to describe the price movement of a stock within a given range of support and resistance over a period of time.
The Directional Movement Index (DMI) is a technical indicator that measures both the strength and direction of price movement and is designed to reduce false signals.