Technical Correction
A short-term reversal against the prevailing trend, often after a sharp move.
Quick answer
A technical correction is a short-term pullback against the prevailing trend.
Definition
A technical correction is a pullback against the main trend, often after an extended move. It is a normal part of how markets move rather than a reversal of the trend. Traders distinguish a correction from a reversal by whether the trend resumes.
How It Works
- It is normal after an extended move
- It is not necessarily a trend reversal
- Support and trendlines often mark its end
Trading Tips
1
Wait for confirmation the correction is over
2
Buy corrections in an uptrend with a plan
3
Watch for trendline or level support
Related Terms
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