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.
Key Takeaways🔑
| →The Stair Steps pattern often forms in line with the trend, offering valuable insights for traders. |
| →Recognizing this pattern can help identify potential trade entry and exit points, enhancing trading strategies. |
| →It’s essential to conduct personal research and analysis before making any trade based on pattern recognition. |
Contents
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.
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.
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
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.
Pros and Cons of Using the Stair Steps Pattern📊
- 👍Helps identify potential trade entry and exit points.
- 👍Can give a hint where prices are likely to break out.
- 👎Requires consistent observation and analysis to recognize.
- 👎Incorrect interpretation can lead to inaccurate predictions.
| Stair Steps Pattern Observations | Insights from Observations |
|---|---|
| Pattern often forms in line with the trend | Can provide valuable insights about the likely direction of the trend |
| Price adjustments often occur at similar resistance levels in an uptrend and a downtrend | These levels can be used to predict potential reversal points |
| The pattern requires consistent observation and analysis to recognize | Traders need to be vigilant and responsive to market changes |
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.
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!
Q&A about the Stair Steps Pattern📌
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- Q: What is the Stair Steps pattern in trading?
- A: It’s a chart pattern that forms in line with a trend, resembling steps of a staircase. It can provide insights about potential trade entry and exit points.
- Q: How do I use the Stair Steps pattern for trading?
- A: Recognize the pattern and monitor its development. Look for opportunities to enter trades when the price touches the trendline at support or resistance levels.
- Q: Are there any limitations to using the Stair Steps pattern?
- A: Yes, it requires consistent observation and analysis. Misinterpretation can lead to inaccurate predictions.
- Q: Can I rely solely on the Stair Steps pattern for trading decisions?
- A: It’s always advisable to use multiple strategies and indicators in conjunction with pattern analysis. Never rely solely on one pattern or strategy.
- Q: How can I practice using the Stair Steps pattern?
- A: You can use demo trading accounts to practice pattern recognition and applying your trading strategy without risking real money.