Using the Trendline with the Stair Steps Pattern to Find Profitable Trading Opportunities


Trend with support-resistance
 

Many patterns are appearing on the price chart. Your job is to discover them. And as you will be doing it for some time, you may soon notice that particular patterns tend to appear repeatedly around a similar time during the day. Maybe you will notice some patterns in the mornings, maybe in the evenings. Doesn’t matter. What matters is how to use this discovery to your advantage.

Let me tell you how. You can prepare a strategy that will use recurring patterns. Trade with such a strategy and potentially increase your balance.

In this guide, I would like to introduce the Stair Steps pattern which often evolves in line with the trend. Let’s begin.

The stair steps pattern overview

As I said in the introduction, the stair steps pattern forms along with the trend. Have a look at the picture below. It shows an uptrend where the price rises and falls abruptly. The graph reminds the stairs, thus a name of the pattern.

Trend structure with support-resistance stairs
Trend structure with support-resistance stairs

In the uptrend, you may notice long consecutive bullish candles. Then, the price adjustment takes place and the cycle starts all over again. The price correction areas create new levels of resistance which soon will be broken again so the uptrend continues.

Now, you need to add a trendline to the chart in order to receive more information. Such a compilation will give you a hint where the prices are probably going to break out and carry on with the former trend afterwards.

How to use the stairs steps pattern together with the trendline in trading at Olymp Trade

Below, there is an example of the stairs steps pattern that has developed along with the downtrend. I am using the 1-minute interval candles chart.

When you notice the stairs steps pattern forms, you have to draw the lines of the support and resistance along with the trend as well as the trendline. With the chart ready is now time to answer the most important question, where to enter the trade.

Try to sell when price is getting close to trendline and broken resistance level
Try to sell when the price is getting close to the trendline and broken resistance level

Long-lasting sell position entry point

During the downtrend, you will observe price correction zones. After them, price drops rapidly and a new resistance level is created. The best entry point is at the exact moment of breaking the resistance level when the trendline touches the price. The trend will proceed downwards so you can enter a sell position for at least 5 minutes.

Short-lasting buy position entry point

When a new trend is developing you can still try to buy using broken resistance levels
When a new trend is developing you can still try to buy using broken resistance levels

In the picture above, there was an uptrend developing for some time, but it came to the point of exhaustion and reversed. Now the downtrend is evolving. What is interesting is that the price adjustments take place at approximately the same resistance levels as it happened during the uptrend. Thus, when the price reaches these levels you may open a buy position that lasts up to 5 minutes.

Long-lasting buy position entry point

There is an uptrend formed in the picture below. You can open a buy position that lasts 5 minutes or more when the price touches the trendline on the support level.

Short-lasting sell position entry point

The uptrend finally ends and a new trend develops in the opposite direction. Again, you may notice, that the previous levels of resistance create strong support in a new downtrend. At the points where the price cuts these lines, you can enter a sell position lasting from 1 to 5 minutes.

Resistance levels in an uptrend acts as a strong support after being broken
Resistance levels in an uptrend act as strong support after being broken

Using the stairs steps pattern along with the trendline is an effective method to identify the entry points for your trades. The pattern also serves as a help in recognising the support and resistance patterns that could be useful for opening the positions.

With the new information you have just received about the pattern called the stairs steps, you should head to the Olymp Trade account and try trading with this pattern. I always suggest practising on the demo account first. And move to the real one only when you feel comfortable with a particular strategy.

Best of luck!

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Bart Bregman

Full time day trading, and helping out with Olymp Trade wiki in my spare time to create an awesome platform for beginners. I'm a digital nomad that travels the world while working from everywhere!

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