Technical Correction

AAA

DEFINITION of 'Technical Correction'

A decrease in the market price of an asset or entire market after extensive price increases. A technical correction occurs even when there is no evidence that the increasing price trend should cease. It is often caused when investors temporarily slow down their purchases of securities, which commonly leads to a pullback toward a short-term support level.

INVESTOPEDIA EXPLAINS 'Technical Correction'

A technical correction is a drop in stock or market prices when there is no fundamental reason for a decrease. After a steady increase in value, investors may become more cautious buyers at the higher prices and look to reevaluate the market, resulting in a decrease in purchases. The drop in purchase volume will stop the upward price trend from continuing while the market re-evaluates the short-term direction.

RELATED TERMS
  1. Technical Decline

    A technical decline is a fall in the price of a security caused ...
  2. Technical Analyst

    A technical analyst, or technician, is a securities researcher ...
  3. Trading Curb

    A temporary restriction on program trading in a particular security ...
  4. Correction

    A reverse movement, usually negative, of at least 10% in a stock, ...
  5. Panic Buying

    A type of behavior marked by a rapid increase in purchase volume ...
  6. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
Related Articles
  1. Investing Basics

    Stock Basics Tutorial

    If you're new to the stock market and want the basics, this is the tutorial for you!
  2. Options & Futures

    Getting To Know The Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask!
  3. Investing Basics

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  4. Economics

    The Stock Market: A Look Back

    The past century was marked by furious economic change. What can it tell us about what lies ahead?
  5. Active Trading Fundamentals

    20 Rules To Trade More Professionally

    Break free from the pack and join the professional minority with an approach that raises your odds for long term prosperity.
  6. Chart Advisor

    These 4 Swing Trades Could Place You in the Money

    Take advantage of moves both higher and lower with swing trades based on trend channels.
  7. Trading Strategies

    You'll Lose Profits Without This Trading Strategy

    A trading edge defines your technical or strategic advantage in the highly competitive market environment.
  8. Investing

    Why These Are 2015's Most-Promising Stocks

    A short list of stocks with strong potential for 2015 and beyond.
  9. Chart Advisor

    Are These Triangle Patterns Breaking Out?

    The next trending move in these four stocks could start from the breakout of these triangles.
  10. Trading Strategies

    Trader Rookie Mistakes: Avoid Them While You Can!

    These 10 common trading mistakes can rob capital and undermine confidence.

You May Also Like

Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  4. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  5. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  6. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
Trading Center