The bearish trap usually occurs when an index or stock price falls from a high trading area to a new low area with high trading volume, creating the illusion of a downward breakthrough, causing panic selling to surge and quickly rebound to the original dense trading area, and breaking through the original pressure line upwards, causing sellers at the low point to step out.

It is worth noting that due to the long-term decline of the stock market, a heavy trap will be formed in the market, and popularity will gradually be exhausted. However, often in times of extremely low market sentiment, it precisely indicates that the stock market is not far from the true bottom. Therefore, learning to use the 'short trap' to select stocks requires not only rational observation, but also greater confidence and courage.

How to identify bearish traps? The discrimination of short traps mainly involves comprehensive analysis and judgment from the aspects of news, funds, macro fundamentals, technical analysis, and market sentiment.

The bearish trap usually occurs when an index or stock price falls from a high level with high trading volume to a new low level, creating the illusion of a downward breakthrough, causing panic selling to surge and quickly rebound to the original level

Dense trading area, and breaking through the original pressure line upwards, causing sellers at low points to step out.

It is worth noting that due to the long-term decline of the stock market, a heavy trap will be formed in the market, and popularity will gradually be exhausted. However, often in times of extremely low market sentiment, it precisely indicates that the stock market is not far from the true bottom. Therefore, learning to use the 'short trap' to select stocks requires not only rational observation, but also greater confidence and courage.

How to identify bearish traps? The discrimination of short traps mainly involves comprehensive analysis and judgment from the aspects of news, funds, macro fundamentals, technical analysis, and market sentiment.

1. Analysis on the Message Surface

Main funds often use the advantage of publicity to create a short selling atmosphere. So when investors encounter continuous negative market conditions, they need to be extra careful. Because it is under the heavy bombardment of various negative news that mainstream funds can easily build positions.

2. Analysis of Trading Volume

The characteristic of the short trap in terms of trading volume is that as the stock price continues to decline, the volume always shrinks irregularly, and sometimes there may even be a phenomenon of no volume short or no volume sharp decline on the market. The trading volume of individual stocks during the market is also very inactive, creating an atmosphere of long-term bearish trends for investors. It is precisely in this atmosphere of creating pessimism that the main force can easily build positions at low prices, thus forming a bearish trap.

3. From a macro fundamental analysis

It is necessary to understand the policy factors and macro fundamental factors that fundamentally affect the strength of the stock market, and analyze whether there are substantial negative factors. If there are no specific substantial short selling factors in the stock market policy background, but the stock price continues to plummet, it is more likely to form a short trap.

4. Analyzing from a technical perspective

The characteristic of the bearish trap in the K-line trend is often several consecutive long bearish lines plummeting, running through various strong support levels, and sometimes even accompanied by a downward gap, triggering a chain reaction of panic in the market; In terms of pattern analysis, the bear trap often intentionally triggers a technical breakthrough, causing investors to mistakenly believe that there is huge downward potential in the future and sell their holdings, allowing the main force to take on a large number of cheap stocks at low levels. In terms of technical indicators, the bearish trap can lead to serious divergence characteristics in technical indicators, and it is often the synchronous divergence of multiple cycles of multiple indicators, rather than the divergence of one or two indicators.

5. Analysis from the perspective of market popularity

Due to the prolonged decline of the stock market, a heavy trap will be formed in the market, and popularity will be continuously consumed by the trap. However, often in times of extremely low market sentiment, it precisely indicates that the stock market is not far from the true bottom. It is worth noting that after four years of a sluggish bear market, the systemic risk of a significant decline in the index is already minimal. Overly bearish on the future market may inevitably lead to falling into new bearish traps.

Finally, I wish everyone great success in the stock market!