A Bear Trap is a trading manipulation technique used by a group of traders or a large whale, where large amounts of a currency are sold at the same time, breaking local price supports.

The manipulators, by dumping their holdings, hope to drive prices down for all other market participants to see.

Those participants think a price correction is occurring, so they sell their holdings or enter in a short position.

It’s at this point in the bear trap that the manipulators buy back their assets at a lower price, again all at the same time, and price reverses, shooting back up.

The manipulators are in profit, and the bears – the sellers – either sold for a loss or small gain or are trapped in a short position.