A correction is the when the price of an asset temporary swings in a direction, opposite to the predominant trend. Corrections takes place both in up and down trends and they will be pointing north in a down trend and pointing south in an uptrend. Those short term deviations from the trend take place either because the price became way too expensive and the early investors started selling to cash out their profits, or because the price became too cheap and buyers stepped in to quickly buy low and sell higher. Imagine the following scenario.

For the past one month the ABC stock went up with $15 then for a few days it dropped with $5 and then during the next month it jumped with another $15. This $5 drop was what we call a corrective pull back, or simply a correction. The overall trend for those 2 months was an up trend, because the stocks increased with roughly $30, but somewhere along the way and for a short period of time a $5 correction took place. A proper trader would buy the shares after the correction and then ride the up trend to cash in $15 profit per share. Often however, traders do the following mistake.

They would trade very short time frames, like 5 mins charts or 15 mins charts. On a candlestick chart, where every candle is lets say a period of 15 mins, those few days during which the correction lasted are represented on the chart by many 15 mins candles each, and traders get confused that the trend has changed now to a down trend. In order to avoid mistaking the direction of the trend, we prefer to analyze the daily charts or at least the 4 hour ones.