Chartered Market Technician (CMT) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

A flat correction in technical analysis is characterized by a sideways price movement that occurs after a prevailing trend. This type of correction typically unfolds when the market consolidates within a narrow range, indicating indecision among traders. The key characteristic of a flat correction is the lack of either a significant upward or downward movement, which differentiates it from other forms of corrections that may involve more dramatic price changes.

During a flat correction, prices often oscillate around a mean level, reflecting a pause in the prevailing trend while traders digest the previous price action. This period of consolidation can lead to a buildup of energy, which may eventually result in a continuation of the prior trend or a reversal, depending on market sentiment and other technical signals.

The other options reference concepts more associated with different market behaviors, such as reversals or spikes in volume, which do not accurately define the characteristics of a flat correction. Therefore, the selection aptly captures the essence of a flat correction in technical analysis.