It may sound strange, but choosing the right yarn for your project in overlay crochet is actually half work done! I am not saying about choosing the colors. But the fiber itself.
When I was learning overlay crochet (with patterns of Melody MacDuffee and Carola Herbst) I did experiment with yarn a lot. I used acrylic, and mix-wool, and rayon. I chose very soft and very stiff yarn. And I also mixed them. I tried color from one palette and very contrasting ones.
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Attaching new yarn
Crochet in back or front loops
"Anchoring" overlay stitches
Melody MacDuffee recommends using stiff yarn rather than soft (and not textured, of course). And I do agree with her totally. Today cotton stiff yarn is the best choice for me. When you use it, you can see how every single overlaid stitch pops out of the crocheted surface. And you have the whole piece nicely structured.
You can see how the choice of yarn influences the final look of the project on two examples of one and the same bracelet.
When I design a new project, I just start crocheting and use my leftovers. Sometimes it works at once and I get a finished design in a few hours. But sometimes it can take weeks or even months to finish it. I have to rip and to make it many times, and I don’t want to use quality yarn for this. That’s why I usually use leftovers of cheap acrylic yarn to design. And then I have many finished projects which are not great in colors. But at least I can use them now and show you the difference in yarn.
Now you can see the difference. Acrylic yarn is softer, and bracelet made of it looks plain. And the second bracelet is made of stiff cotton. The image is much brighter (not only in pictures, but in real life as well).
You can say: yes, of course they look totally different, as their color combinations are in “different styles”… But, please, look also at this bracelet made in plain color palette but with stiff cotton yarn:
So, softer yarns or closely related colours normally make the finished image look less vivid. But it does not mean that the result will not be great.
For example, I use soft mix wool yarn to make pillow covers in overlay crochet. And I love them. The choice of your yarn just depends on which effect you want to achieve.