1. Create a New image at 800x600 with a White background. Create a New layer. Press F to activate the Flood Fill Tool, then fill with the following Gradient.

Settings used:

• Gradient = Metal chrome
• Angle = 45
• Repeat = 45
• Style = Linear
• Invert = Unchecked

2. Press Ctrl+Shift+H to adjust the Histogram. Use these settings.

Settings used:

• Edit = Luminance
• Output max = 255
• min = 0
• Midtones = 50
• Low = 0
• Gamma = 1
• High = 158

3. Go to Adjust | Color Balance | Manual Color Correction... use these settings.

Settings used:

• Preset target color = Fruits (Choose "Cherry" in the color swatch)
• Preserve lightness = Unchecked
• Preserve saturation = Unchecked
• Source = #b1a08e

Run Manual Color Correction again. This time change Preset target color to Manual target color. Then change the Source to #c0e5ff and the Target to white.

4. Use the Text Tool to create some selection text using these settings.

Settings used:

• Font Name = Your choice — I used Black Jack
• Size = 100
• Create as = Selection

Press Ctrl+Shift+I to Invert the selection, then press delete. Press Ctrl+Shift+I to Invert the selection again.

5. Make the Background layer active, then create a New layer. Go to Selections | Modify | Expand... expand by 2. Flood Fill the selection with Black. Press Ctrl+D to Select None.

Select the topmost layer, then Merge Down the layer. (Layers | Merge | Merge Down)

6. Duplicate the current layer. Go to Effects | 3D Effects | Inner Bevel... use the Groove preset. If you do not have the Groove preset, use these settings.

Settings used:

• Bevel = 8
• Width = 4
• Smoothness = 0
• Depth = 5
• Ambience = 0
• Shininess = 0
• Color = White
• Angle = 315
• Intensity = 50
• Elevation = 30

Change the current layer blend mode to Difference. Duplicate the current layer. Change the current layer blend mode to Lighten.

Hide the Background layer, then merge the visible layers. Add a drop shadow, if you wish.

That's it! Now you can create Candycane Text.