Creating a groovy text effect

Start by creating a thin rectangle using rectangular shape tool.

Create a duplicate layer and move it downwards and to the right.
Create more duplicates and adjust their placement as shown in the image below.

Select n merge all rectangle layers. Create a duplicate of the rectangle layer. press ctrl+T and rotate 90°. Save this file as a psd file. We named it pattern2.
Create a new file. type the text using a bold font.
Duplicate layer. Hide the original text layer. Select the duplicate text layer. From filter menu select distort>>displace. Apply settings as shown.
Select the original text layer. Ctrl+Click the layer thumbnail to get the selection. Select the displaced layer. Press Shift+Ctrl+I to invert the selection. Press delete.

From filter menu select blur>>motion blur. Apply settings as shown.

From filter menu select distort>>shear. Apply settings as shown. After applying the filter change layer mode to pin light.
Duplicate original text layer. Move it above all layers in layer order in layer palette. Rasterize this text layer. Ctrl+Click the layer thumbnail to get the selection. From select menu select modify contract. contract the selection by 5 pixels. Press Ctrl+Alt+D to feather the selection. Press delete.
Select original text layer. Ctrl+Click the layer thumbnail to get the selection. Press Shift+Ctrl+I to invert the selection.

 

Select the layer we applied motion blur on. Press delete.