A term used to describe price action during a partial reversal of a trend.

The word “correction” suggests that the current trend is over-extended, and a reversal is taking place. The perception of overbought or oversold conditions invite those holding the position to exit, and others to enter the market with the idea of buy low, sell high.

A correction also implies that the original trend is still intact, and that the “correction” is temporary, leading eventually to a continuation.