In trading, a correction refers to a drop of 10% or more in an asset’s price from its most recent highs. This movements usually follow periods of optimism where buyers are piling into an asset expecting it to rally higher.

Correction does not necessarily signal the end of a bull market. Following a movement like this and a period of consolidation an asset can continue to rise, setting higher-highs. Sometimes, however, a corrective move can break down into an all-out reversal.


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