Stair Formation This is just another candle stick pattern that can be useful towards your understanding of the forex market. It is not the holiest grail, but it will help improve your understanding of forex. Just the same way a normal stair consist of a set of steps leading from one floor of a building to another, in forex, stair formation consist of a set of three candles leading to the direction of the overall trend. You will notice in this example, I’ve only used bearish stairs for illustrations; this does not however mean, there are no bullish stairs. There are several bullish stairs; this is just a perfect case of stair formation that’s why I choose it. A Bullish Stair formation should look like below Bullish Stair Formation Bearish Stair Formation The Third Phase In this phase, the remaining bunch of buyers tries to subdue the market but cannot rise above the key line. Instead, after hitting the Keyline, sellers come in to push the price lower; at the end of day, the daily candle end up closing a few pips below the previous two days candle. Notice this is now a bearish pin and signals a continuation of the bearish trend. If you’re trading a stairs formation, pick a short position after the third phase. However, for intraday traders, you should check the same chart of the lesser time frames, below is the same pair on a 4 hour chart.