After a sharp sell-off, the biggest test for the market this week is not panic, but the bull traps set by market makers during a weak rebound.

At this stage, many retail investors see even a slight uptick and rush to go all in and buy the dip. But a sound risk-avoidance strategy is never to blindly catch a falling knife. Until the market structure is firmly established and a trend reversal is confirmed, protecting your principal and maintaining a defensive position should come first.

It’s far more reassuring to identify a genuine bottom formation and wait for confirmation signals to emerge than to keep guessing where the low is halfway down the slope.

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