What is a bear trap?

• **bear trap definition:** The market maker intentionally creates panic selling through short-term declines, triggering retail investors to sell, in order to absorb chips at a low level, and prepare for subsequent upward movement.
• Feature Performance:
1. Quickly broke through the key support level, but then rebounded rapidly.
2. Volume anomaly, volume increases during declines, but volume significantly increases during rebounds.
3. Technical indicators are bearish, but no trend break has formed.
2. Current Market Structure Analysis
Technical chart observation
• Support level situation:
• 97,572.6: The current support level is close to being tested multiple times, if held, it may be a signal for the institutions to absorb funds.
• 96,472.8: Secondary support level, breaking this level indicates that the bears are in a stronger position.
• Trading volume performance:
• During the recent decline, the trading volume did not significantly increase, indicating a neutral and cautious market sentiment.
• There is no typical 'volume down, rebound with shrinking volume' characteristic.
• Indicator Signal:
• The MACD is in bearish territory, but there is no significant increase in selling pressure.
• The KDJ indicator is hovering in the low range, and there is a short-term demand for rebound.
3. bear trap probability assessment
Based on big data experience and current market performance, the probability assessment of bear trap is as follows:
Bear trap possibility (about 60%):
• Reason:
1. Support effectiveness: If the support at 97,572.6 is repeatedly tested without breaking, it may be the market maker's attempt to absorb funds.
2. **Volume Change:** The current decline is accompanied by shrinking volume, indicating that the main force may not truly exert selling pressure.
3. **Technical Repair Demand:** KDJ and RSI indicators hover at low levels, with technical rebound momentum.
4. **Market Logic:** The market maker may take advantage of low panic sentiment to accumulate funds for subsequent rise.
Probability of Real Breakdown (about 40%):
• Reason:
1. If the price falls below the support level of 96,472.8, accompanied by an increase in trading volume, it may not be a bear trap, but a real decline.
2. If the bearish momentum of MACD continues to expand, it indicates that the market is entering a bearish dominance phase.
4. Operation Suggestions
Short-term strategy
1. Low suction test:
• Condition: Price stabilizes around 97,572.6 and trading volume does not significantly increase.
• Operation: Lightly position long, target looking at 98,500.
• Stop loss: set below 97,300.
2. Breakthrough Chase Long:
• Condition: Price stabilizes at 98,667.8, accompanied by increased trading volume.
• Operation: Chase long to 99,000-99,500.
• Stop loss: set below 98,300.
3. Breaking below bear trap:
• Condition: Price falls below 96,472.8, accompanied by increased trading volume.
• Operation: The target for short positions is set at 95,800.
• Stop loss: set above 96,800.
5. Risk Control
• **Position Management:** During uncertain stages, strictly control the position to avoid chasing highs and killing lows.
• Pay attention to key positions:
• 97,572.6: If repeatedly tested but not broken, it may be a bear trap.
• 96,472.8: If it directly falls below, be wary of further bearish pressure.
Summary
Considering the current market performance, there is a higher possibility of a bear trap, estimated at around 60%. It is recommended to closely observe the performance of the support level at 97,572.6. If the support holds and there are signs of rebound, you can consider buying at a lower price. However, if it breaks below with increased volume, be cautious of the possibility of a real decline. Trade with caution and set strict stop-loss limits.