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Creating an embroidered look in Photoshop
Paul O. Zelinsky is not only an award winning illustrator, but is an avid Photoshop and After Effects user, and an active Adobe community member. When a question about creating a cross stitch appearance for photos came up, Paul quickly came up with a solution.
There are many different methods to employ this effect, but they all include a small "stitch" pattern that you'll need to download first.
Source:Digital Media Online.
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