fbpx

Guide to Trading Using the Trendline on the Stair Steps Pattern


taking notes with laptop
 

One of the skills every trader must acquire is identifying patterns on the price chart. If you trade long enough, you'll notice certain patterns repeating themselves almost at the same time interval everyday. This could be in the morning hours, afternoon or evening. If you notice such a pattern on IQ Option, it's best to develop a strategy to profit from it each time it develops.

One pattern that commonly develops along trends is the stair steps pattern. This guide will show you how it looks like and an easy way to trade it using a trendline.

trendline downtrend
Trendline on downtrend

Overview of the Stair Steps pattern

The stair steps pattern develops along a trend. In the case of a downtrend, prices will experience sharp drops (long consecutive bearish candles) followed by price adjustments in repeating cycles. The result is a pattern that looks like stairs steps. The price adjustment zones will create new support and resistance levels from which breakouts occur continuing the trend.

Take a look at the chart below.

ladder model with trend
Stair steps pattern

You'll notice that once a trendline is drawn to connect the lower-highs in the downtrend above, the line touches the breakout points of the resistance levels. These breakouts occur after a period of price adjustment before the trend resumes downward movement. Right where the breakout occurs, you'll notice that the pattern looks like the steps on a staircase.

Looking at the stair steps pattern alone doesn't give you much information. But coupled with the trendline, you will have an idea about where prices are likely to breakout and continue with the previous trend.

How to trade using the stair steps pattern with a trendline on IQ Option

Using the chart below, you'll notice that a stair steps pattern has developed along the downtrend. A similar pattern forms when the trend finally reverses adopting an uptrend. So how do you trade this pattern?

two trendlines

First you'll need to draw the support and resistance levels that form along the trend. Take a look at the chart below.

 

signals from trend line and ladder

Enter long sell positions when trendline touches breakout point on downtrend

After the price adjustments occur along the downtrend, a sharp price drop follows (breakout) creating new resistance levels. Right where the price breaks out is the perfect place to enter a long sell position. You know that the trend will continue moving down once the breakout occurs. If you're using 1 minute interval candles, your trades should last 5 minutes or more.

Enter short sell positions when prices touch resistance levels on uptrend

Once the trend finally reverses, you'll notice that price adjustments along the uptrend will occur at around the same resistance levels that formed during the downtrend. Once prices touch these levels, you should enter short sell positions lasting 1 to 5 minutes.

Enter long buy positions when trend finally reverses

Still using the chart above, the downtrend finally ends and a new uptrend develops. At the point of reversal, you should enter a long buy position.

You'll also notice that there will be some price adjustments along the new trend forming new support and resistance levels. Here, you can enter short sell positions as described above.

Trading the stair steps pattern with the trendline is an easy way to identify possible trade entry points along a trend. The stair steps pattern also makes it easy to identify support and resistance levels which can be used to enter short positions.

Now that you've learned how to trade using the stair steps pattern with the trendline, try this strategy on your IQ Option practice account today. We'd love to hear your views about this strategy in the comments section below.

Good luck!

How useful was this post?

Click on a star to rate it!

Average rating 4.5 / 5. Vote count: 31

No votes so far! Be the first to rate this post.

As you found this post useful...

Follow us on social media!

We are sorry that this post was not useful for you!

Let us improve this post!

Tell us how we can improve this post?

Download this article as PDF. (English)

Enter your Email Address

Bart Bregman

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

Recent Posts

GET STARTED FOR FREE
This is default text for notification bar