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Most f us learned to climb stairs not long after we learned how to walk. Before long, and with practice, it became second nature. Observing and properly reacting to the charting formations known as bull and bear stairs can become just as simple.
Once you understand the basics, using stairs is a way to make consistent, relatively low-risk profits. Soon you can be executing trades based on this pattern as intuitively as you physically climb and descend stair steps--with hardly any deliberate thought at all.
Before we get to the execution, however, we need to look at exactly what goes into this simple bar chart formation on a daily chart.
Currency futures markets make excellent candidates for this strategy. We will look at the euro, Australian dollar, Canadian dollar and British pound.
Currency trading is often presented as a specialized practice, requiring specialized knowledge of global finance and macroeconomics to trade successfully. While a fundamental background doesn't hurt when you're trading any market, price movement is price movement. In that sense, bull and bear stairs, which are predominant in the Nasdaq 100, the Dow Jones Industrial Average, the Russell indexes and the S&P 500, are just as useful in forex.
Indeed, stair patterns are common on daily charts, and if you've been trading for any time at all, you are probably quite familiar with them. A bull stair is marked by successive trading days in which each day's low is higher than the preceding day's low and each day's high is higher, though not always, than the preceding day's high. The price seems to climb a set of stairs along steadily rising lows.
Stairs can be …