Price on the ladder – how to use the stair steps pattern effectively


Stair step pattern on Binomo

The candles often form the patterns on the price charts. These patterns are sometimes repeatable. You can observe the same combinations every morning or evening. And when you spot that one pattern repeats itself often enough, you can use it to your advantage. Build a strategy with it and open successful trades.

Today, I will describe the method of using one of such patterns together with a trendline. The pattern is called the Stair Steps.

Stair steps pattern on USDCAD 1m chart
The Stair Steps pattern on the USDCAD 1m chart

The Stair Steps pattern overview

You can recognise the Stair Steps pattern when there is a noticeable trend. During the uptrend, the prices rise abruptly and then there is a correction in the prices. Such a cycle repeats itself forming the steps. New support and resistance lines are created. Next, the price breaks out from these levels and continues the previous direction.

Check the picture below to see how the Stair Steps pattern looks like on the price chart.

Stair steps pattern in down trend
The Stair Steps pattern in a downtrend

The Stair Steps pattern does not say a lot about places where you should open a position. That is why you should use a trendline together with it.

In the above picture, there is a trendline drawn during the downtrend. It joins a few lower-highs. At some point, it crosses the support lines. This happens after some time of price adjustments and signifies resuming the downtrend. The chart forms the shape of the staircase steps.

Trading with the Stair Steps pattern along with a trendline on the Binomo platform

Look at the picture below. The price was first moving downwards, then reversed and continued upwards. A couple of price adjustments have created the steps.

Trend reversal
Trend reversal

The very first thing you need to do is to add the support and resistance levels to your chart. Then, wait for a signal from the Stair Steps pattern.

There are many opportunities to open a transaction
There are many opportunities to open a transaction

Opening trades with the Stair Steps pattern and a trendline

There are many possibilities to open positions based on the Stair Steps pattern. Generally, you have to pay attention to the existing trend that you have set on the chart with the trend line. The market often respects horizontal support and resistance levels. The price also reacts with trendlines. Therefore the ideal situation is when the price reaches the trendline and at the same time the horizontal level. In such places, a decision is made about the further direction and most often it will be a rebound of the price from the trend level and the trendline. If you are observing on a 1m chart, open positions lasting at least 5 minutes. If you are looking at a 5m chart, let your trades last about half an hour. The confirmation of the entry itself can be a candlestick pattern or any other visible price response to the level.

Transactions against the trend

It is also possible to make transactions against the trend. Remember that they are generally riskier. On the chart above, I have marked some of these places. After breaking the downward trendline, an upward trend started. Note, however, that the price follows the upward trend and makes corrective moves. Peaks in this trend often appear at resistance levels. This is where it is worth looking for a motive to take a position.

Final words

The Stair Steps pattern develops repeatedly on the price chart. You can easily draw the support and resistance lines with it. Using a trendlineOpens in a new tab. additionally, you will receive entry points for your trades.

Head to the Binomo demo account. You can practice trading with the Stair Steps pattern in a risk-free environment there. Once you get hold of this strategy, make an investment in a real account. Share your thoughts about the Stair Steps pattern in the comments section below.

Best of luck!

 

 

Bart Bregman

Fulltime Day trading, and help Binomo wiki in my spear time to build an awesome platform to help beginners out there. #digital nomad, traveling all over the world.

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