The "Colour Balance"
tool seems to be favoured by many Photoshop novices. It's relatively
intuitive and quite flexible in the adjustment choices it gives. We can
work on "midtones", "shadows" and "highlights"
independently, but there are hidden dangers in this approach.
Realistically, if we decide to use this tool to make colour corrections
it's best to stick only with "midtone" adjustments.

The screenshot shows that I have increased red in the "midtones"
in an attempt to reduce the cyan cast to the image. The difference
between the Before and After images is most obvious in the "Church
driveway".
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Before
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After
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By toggling the "Preview" On and Off will we can see a
before and after effect. As mentioned above the colour balance
tool is reasonably intuitive and so relatively easy to use. However, it's
also pretty limited in what it can achieve, so I don't think much more
time needs to be spent explaining how to use it.
The "Levels" option is probably the tool most Intermediate
Photoshop users choose and is certainly a lot more useful than either of
the tools described previously. As can be seen on the dialog box below it
offers a histogram, as well as two sets of sliders, and three "eyedropper"
tools. With the "Levels" tool we can also adjust image brightness,
contrast and colour, but in a much more controlled manner than the
brightness/contrast or colour balance tools.

Photoshop 7 Levels
Basic tone correction using levels
Looking first at the RGB
histogram, the horizontal axis indicates the distribution of dark to
light pixels in our image, and the vertical axis the number of pixels at
any given lightness level. From this we can determine that for the above
histogram there are no totally black (left end) pixels and only a small
number of absolute white (right end) pixels in the image.
If we begin by considering
the "Input" slider bar we find three triangles, black, grey and
white. These triangles represent the "shadow", "midtone"
(brightness/contrast or gamma) and "highlight" adjustments. Moving
the "shadow" and "highlight" slider towards the centre will
increase image contrast. Moving the "midtone" slider to the left
brightens the image, whilst moving it to the right darkens the image.
Ideally we would move the two outer triangles to just clip the edge of
the first group of pixels (see screenshot below). However, it isn't
always the case that the point at which the data begins and ends in the
levels display is giving us a true indication of the actual spread of
image data.
Photoshop 6/7 and CS has a
feature called the "Clipping Display" that enables us see the
effects of an "Input" slider adjustment. Simply hold down the "ALT/OPTION"
key while moving either the "shadow" or "highlight" slider
towards the centre will display exactly which pixels are being clipped
(see screenshots below).

Adjusting the Highlights for
"Clipping" display

Highlight Clipping display
The above screenshot exaggerates the technique slightly so that the
reader can better appreciate the impact of moving the "Highlight"
slider too far. Typically we would want to stop when the image only just
begins to appear. In the above example we can see that the blue channel
has been taken to saturation (level 0) and a small section of cloud has
been "bleached out" to white. A similar exercise for the "Shadow"
clipping display produces the following results.

Shadow Clipping display
The levels "Output"
slider bar allows us to reduce image contrast by compressing the data and
making a dark pixel less dark or bright pixel less bright. The "Output"
control can be used for targeting an image for particular print
characteristics, e.g. setting the maximum black at level 5 and minimum
highlight at level 250. This feature can be quite helpful when the user
finds that their particular printer model tends to "block" what
should be perfectly printable "shadows" or "blows" well
detailed "highlights" out to white .
Basic colour channel corrections using Levels
So using the RGB "Levels"
dialog we have managed to adjust the tone of our image. However, one of
the main advantages of levels over "Brightness/Contrast" is colour
correction. What about colour correction?
By selecting the "Channel"
popup window we can choose any one of the three RGB colour channels. The
example shown below is for an adjustment to the red channel. In this case
the "midtone" and "highlight" sliders were moved to the
left thus increasing red. Moving the "midtone" slider to the right
would be the equivalent of increasing cyan. Similarly, if we had selected
the blue channel then moving the middle slider to the left increases
blue, to the right reduces blue (increases yellow).

Typically we will want to
avoid adjusting the shadow slider, but sometimes, as in our example, it's
helpful to move the highlight sliders slightly to reduced colour casts in
highlight areas. However, like the "Colour Balance" tool discussed
earlier we need to be careful.