Correction

A correction is a price rebound which can be observed after every trend impulse. After a correction takes place, the price returns to the trend. A correction on the currency market takes place due to the overselling or overbuying of instruments at the current moment in time. To measure the depth of a correction, traders need to apply analytical methods which are based on Fibonacci levels. Corrections may be upward, downward or sideways. Trading strategies which are based on trading against the trend (during a correction) differ in how much risk is involved.