Bull Trap (False Breakout)
BearishReversalIntermediateA close above the old high pulls buyers in. Then price falls right back under it.
Verdict: CautionBitcoin 4H: 102 trades, won 48%, avg trade +0.6% vs random day −0.2%. Backtest
Price rallies to a high, pulls back, and leaves a swing low under it. Everyone marks that old high.
step 1/6
Trade rules
| Direction | Short (sell) |
|---|---|
| Entry | The first candle to trade above the latest main swing high also CLOSES above it. Within the next 3 candles, a candle CLOSES back below the old high. |
| Cancelled if | No close back below the old high within 3 candles. A candle that makes a new high can't be the entry; the stop moves above it. |
| Target | Back to the low, projected from the breakout |
3 common mistakes
- Shorting the breakout candle itself, before price is back below the old high.
- Calling it a trap days later: after a few candles above, it's a breakout.
- Stop at the old high instead of above the new high: one wick takes you out.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 | 102 | 48% | +0.60% | −0.19% |
| US large caps (50) · 1D · 2016-2026 | 878 | 39% | −0.24% | −0.58% |
Verdict: CautionBeat a random entry in some markets, not in others.
pattern +61%random −19%
pattern −211%random −506%