It is one of the seasoned trader who introduced me to the concept called “tactical trading”. Of course it is during a routine conversation that I asked a question to him “which one do you trade? Fundamentals or technicals? He told “I do both at a time!” meaning he trades technicals and fundamentals simultaneously. This sounded too funny to me as majority of traders either trade fundamentals or technicals and not both, that is too at a time! This curiosity and my eagerness to really explore this style of trading made me to learn the same in depth. It took me almost 5 years to learn nuts and bolts of this style of trading. It is named as”tactical trading” because in this style of trading we use more of our intelligence as well as tact as compared to the pre-defined systems and strategies used in most of the styles of trading.

Tactical trading has many dimensions and it is highly impossible to cover all of them in a single article. In this article, I will deal with an element of under this style of trading known as “price corridor”.

One should note the fact that like price action, explaining tactical trading with real time charts is also a hilarious task as what happens during live action cannot be explained in a same way, post live action. Hence as much as possible I have presented the charts in a way to resemble "near to live action”. Luckily we got an ideal set up in AUD/USD on 6th Sep which makes explaining this concept much easier for me.

One more important aspect of tactical trading is - under this style, the trader makes a decision only after assessing the “fundamental impact on technicals ". Hence In this article I have covered that aspect as well i.e.: How do we interpret the “fundamental impact on technicals”.

Since our point of discussion is around “price corridor”, below image deals with basic essentials on “price corridor”.

Note: The number of fighting bars in this case is 3. However there is no such rule that it has to be 3. What we need is at least 3 and anything more than that also is fine to make this pattern a valid one.


The flow of trading under tactical trading goes as below:

1. Prepare/mark the chart for fundamentals release time.

2. Make a technical assessment of chart before the fundamentals are released (macro Perspective).

3. Make a technical assessment of the chart leading to fundamentals release (Micro perspective).

4. Once Fundamentals are released, wait for the “initial impact on technicals “to dissipate.

5. Make an assessment of the “fundamental impact on technicals“ to ascertain trading opportunities.

6. Take the trade in case opportunities are available.

7. Pass on in case the “fundamental impact on technicals “are not clearly visible (ambiguity).

Below is the explanation of 2 aspects which I have mentioned in the process flow above

  • Initial impact on technicals: Whenever there is a major fundamentals release, initially there is a reaction which is highly volatile. This need not necessarily be an emotional reaction. Instead it can be due to big party/pocket/institutions involved in either accumulating or distributing as the case may be. During this period price travels back and forth. This initial impact on technicals may last for 15 Min or even 1 hour depending on the importance of the news. The visibility of the initial impact can be clearly seen on lower timeframes starting from 5 Min to 30 Min.
  • Fundamental impact on technicals: After the initial volatile reaction, there comes a period when all the dusts would have settled down and we see the clear picture of “fundamental impact on technicals”. This “real impact of the fundamentals on technicals” is usually ascertained using higher timeframes preferably 4 hour TF and above. Once we ascertain this real fundamental impact on technicals, we are in sync with big money and institutions which makes all the difference to our trading capital.


Without dwelling more on theory part, I would proceed to the practical part as that is what earns the bread and butter for the trader!. I have tried to present the practicals step by step though I can’t make the past charts look like a real-time chart as told earlier.

Step 1. Prepare/mark the chart for fundamentals release time.

The pair we are referring to is AUD/USD and we have 2 major fundamentals ready for release by 2.30 AM GMT on 6th Sep.


Step 2. Make a technical assessment of chart before the fundamentals are released (macro perspective)

Under this activity we make technical assessment of higher time frames like weekly, daily and 4 hour. In our case, we will do daily and 4 hour.

Daily TF

4 hour TF.

4 hour TF


Step 3. Make a technical assessment of the chart leading to fundamentals release (Micro perspective)

When we make out a “potential price corridor”, we do not conclude anything as price can make big move in any direction. Also note that in all cases we do not get clear picture and in such cases we pass it.


Step 4.Once Fundamentals are released, wait for the “initial impact on technicals" to dissipate.

As a tactical traders, we do not trade news itself. Neither do we give extra weightage to the fundamental news. What all we look at is “the impact of fundamental on technicals".

In this case we have mixed news meaning one good and the other bad. In such case it is very difficult to either trade pure technicals or pure fundamamentals.

As I did tell earlier, the initial impact on technicals are more visible in lower time frames. Below is a 5 Minute chart followed by 30 minute chart which depicts the phenomena of initial impact . As soon as the news are released the price gaps down and then moves in the opposite direction.

Of course, lot many traders use 1 hour chart for measuring the fundamental impact on technicals. However as a thumb rule, I make use of 4 hour chart as that's where the seasoned traders are and that's where the big money is! Though we do not open positions based on 1 hour close, the impact, the momentum is pretty much visible in this particular TF as well. However in this case 1 hour close coincided with 4 hour close.


5. Make an assessment of the “fundamental impact on technicals" to ascertain trading opportunities.

Here is what we needed. The 4 hour close. The fundamentals got released at 2.30 AM and this 4 hourly bar closes at 3.00 AM GMT means half an hour is over and the dust is settled and we are in to some serious business. The rejection at sellers corridor, then a strong close at buyers corridor, the confluence area which attracts big money - all these make us to open a long position. No need to mention now we are in sync with the thought process of big guys/institutions.

As I have said earlier, once we are with big pockets, we can always expect to make big moves in a short period. Same applies to our trading capital as well.

One more great and unique lesson I have learned under this style is spotting another pair having same base currency forming the same pattern or resembling the same pattern and taking positions to multiply or magnify the gain. To do that obviously we make use of co relation table. We will take AUD/JPY which has a 4 hourly co relation of 90 to AUD/USD. Now we look at the same to spot the trading opportunities.

It is a fact that the pairs having positive correlation of above 80, not only move in same direction, they also follow almost similar phenomena as well. If you see the below chart AUD/JPY , it also had a “potential price corridor ". Except the fact that it did not touch the sellers corridor, everything else is same in comparison to AUD/USD for that particular given time frame.

Once the price closes inside a particular corridor on a higher TF post release of fundamentals, the buying interest increases heavily leading to big moves.

Concluding notes: I treat fundamentals and technical like 2 sides of a same coin. They compliment each other. Though lot of traders believe that both are contradictory to each other, I feel they co exist. According to me every fundamental release is nothing but dissemination of an information to which the technicals react. It is the skill of decoding that reaction (fundamental impact on technicals) which makes a trader successful in trading fundamentals and technicals with high success rate without defeating the trading objectives.

Note: The images produced in this article are property of respective owners either online or offline. The images are taken only for references and not for any other purposes.