We describe a method to detect galaxy clusters and groups in photometric redshift surveys that is suitable for the analysis of the variation of galaxy properties with environment in deep fields, as well as a follow-up technique for future cosmological studies based on the analysis of large scale structures. As an application of our method we describe the discovery of a localized overdensity at z~1.6 in the GOODS-South Field, presumably a poor cluster in the process of formation. The cluster has been detected as a 4σ peak in the three-dimensional galaxy density field estimated from the state-of-the-art photometric redshifts of the GOODS-MUSIC catalog. It is embedded in the larger scale overdensity of galaxies known to exist at z=1.61 in the area. The properties of the member galaxies are compared to those of the surrounding field: we found that the two populations have significantly different luminosity, stellar mass and colour distributions. The reddest galaxies have colors consistent with a forming “red sequence”: the colors of the reddest cluster galaxies, evolved according to their best fit models, are consistent with the red sequence of lower redshift massive clusters. The estimated total mass of the cluster is in the range 1.2×10¹⁴–3.5×10¹⁴.