A bull trap happens when a false signal occurs that a declining trend in a stock or index has reversed and is heading upwards when, in fact, the security will continue to decline. A bull trap is therefore set by bears who start shorting again once the buying momentum dries up and the stock or index starts to retreat once more. In a bear trap the converse occurs ie a false signal that the rising trend of a stock or index has reversed when it has not and the bears start to short and get caught. It can also happen during a bear market reversal when short sellers believe the markets will sink back to its declining ways. If the market continues to rise, the short sellers get trapped and are forced to cover their positions at higher prices.
www.investopedia.com So, if banking stocks and the index were to resume their declining trend, this is a bull trap for the buyers set by the bears - alternatively, if this is indeed a trend reversal and you were to go short, it will be a bear trap. So, now that the terminology has been explained, the choice is yours to decide what is happening here..
