I just saw many traders falling into the same trap over and over again. It's called the 'dead cat bounce,' and it's one of those patterns that seems easy to spot but actually traps thousands of people. Let me explain what's really happening here.

Imagine this: the market drops sharply, say by -8%, and suddenly you see a 2-3% upward move. On the chart, it looks like something is changing, right? Many think it's the perfect moment to buy in. But this is where most get it wrong.

That small rebound isn't the start of a new trend. It's just that—a temporary technical bounce. The market takes a breather before continuing to fall even harder. And the worst part is that sometimes several of these weak bounces happen, each lower than the previous one. That’s a sign that sellers still have full control.

The obvious question is: how do you recognize if you're really seeing a dead cat bounce and not a genuine reversal? There are key details to look for. First, pay attention to volume. If the increase happens with weak volumes, without strong support from buyers, it's a bad sign. Second, observe how far the bounce goes. If it hits Fibonacci levels 23.6% to 38.2% and then reverses downward, it's probably a dead cat. Third, check where the price is relative to key EMAs. If it stays below, the downward pressure remains strong.

There's one more detail: each new high is lower than the previous one. That’s no coincidence. It confirms that the bearish trend still dominates.

Professionals understand this well. While beginners buy on the first green move thinking everything has changed, experienced traders wait for real trend confirmation or directly use these bounces to open short positions. It’s the difference between acting on emotion and acting logically.

The name 'dead cat bounce' comes from an old stock market saying: even a dead cat bounces if it falls from enough height. It means that a small rebound after a sharp fall is completely normal and predictable. But that doesn’t mean anything in terms of trend change.

The conclusion is simple but crucial: not every rise is the start of something new. Sometimes the market just takes a breath before the next wave of declines. If you want to avoid losing money in these traps, you need discipline and patience. Wait for confirmation. Don’t buy on the first green. And remember, a dead cat bounce may look like an opportunity, but for many traders, it’s the beginning of the end for their capital.