False Breakdown (Bear Trap)
BullishReversalIntermediatePrice closes below the old low, sellers pile in, then it snaps right back.
Verdict: UseBitcoin 4H: 118 trades, won 51%, avg trade +0.3% vs random day +0.3%. Backtest
Price falls to a low, bounces, and leaves a swing high above it. Everyone is watching that old low.
step 1/6
Trade rules
| Direction | Long (buy) |
|---|---|
| Entry | The first candle to trade below the latest main swing low also CLOSES below it. Within the next 3 candles, a candle CLOSES back above the old low. |
| Cancelled if | No close back above the old low within 3 candles. A candle that makes a new low can't be the entry; the stop moves under it. |
| Target | Back to the high, projected from the breakout |
3 common mistakes
- Buying while price is still below the old low, hoping it's a trap.
- Waiting a week for the reclaim: after a few candles it's just a breakdown.
- Putting the stop at the old low instead of under the new low.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 | 118 | 51% | +0.31% | +0.26% |
| US large caps (50) · 1D · 2016-2026 | 862 | 51% | +0.62% | +0.58% |
Verdict: UseMade money and beat a random entry in every market tested.
pattern +37%random +30%
pattern +530%random +499%