Forex Zone | Forex Forum

What Causes a Bullish Trap in Forex?

Discussion started on Forex Advertisements

  • Posts: 12
  • Points: 523
  • Likes Received: 1
  • Reputation: +0/-0
What Causes a Bullish Trap in Forex? in Forex Advertisements_xx

Bullish traps can occur in forex trading for a variety of reasons. When the market breaks through an important resistance level, traders who are long may decide to close their positions, traders who are short may think that the breakout will not last, the current price is too high, and the market is overbought, which leads to sell orders.

Most of the bearish traders in the upward breakthrough market make trading decisions based on the fundamentals of the market, which is actually an effective way to avoid the bullish trap.

As selling pressure builds and the market moves lower, stop loss orders for bullish traders may be triggered, further accelerating the market downside. Eventually the market could break below an important support level, forming lower lows and signaling a bearish trend reversal.

Liquidity is also a reason for the bullish trap. Low liquidity in the forex market usually leads to higher volatility. When liquidity dries up, even a relatively small buy order can lead to large upside swings due to insufficient sellers. Once the market breaks above the resistance level and sellers start to flood the market, the price reverses quickly.


Source: Forex Rebate http://www.forexrebateking.com

Linkback: https://www.forex.zone/forex-advertisements/9/what-causes-a-bullish-trap-in-forex/4025/
#1 - December 30, 2022, 08:36:52 AM

Members:

0 Members and 1 Guest are viewing this topic.


* Similar Topics

xx
Tips for Overtrade Trap Free

Started by rais on Forex Education

204 Replies
2314 Views
Last post December 30, 2022, 06:11:37 AM
by Vernalta
xx
Forex Charts Secret - Reveal - How Forex works?

Started by trader9090 on Trading Systems

1 Replies
704 Views
Last post July 29, 2019, 02:40:35 PM
by Master4x
xx
Interactive Forex Course of Forex Tester

Started by emetserg on Forex Education

14 Replies
296 Views
Last post June 01, 2022, 03:16:40 AM
by Nick77
xx
Best forex signals free from the best forex signals provider

Started by best forex on General Forex Discussion

4 Replies
1813 Views
Last post September 10, 2022, 08:33:15 AM
by Dana D