"poisson rouge" means "goldfish" but was translated to "red fish", is this a correct translation in English?
No, "red fish" is not a correct translation. But "poisson rouge" can be used informally in French to mean: "I'm kidding you", rather like we would shout "April Fool!" in English. I'm not sure how widespread this is, as I can only recall it being used by one native French speaker from Orleans. Maybe Duolingo are just fooling around by giving the translation as "red fish", rather than "goldfish". "Poisson rouge!".
It's probably because they were using Dr. Seuss' "One Fish Two Fish Red Fish Blue Fish" as a practice sentence. http://books.google.com/books/about/Poisson_Un_Poisson_Deux_Poisson_Rouge_Po.html?id=bX_OjwEACAAJ