Since I discovered the Chaos Clamshell pattern in 1990, I have found it to be a most useful pattern for trading. In it's basic form, it is a 7 move complex zig-zag. It shows up on charts ranging from one minute bar charts, to daily, weekly, and even monthly. 

This chart shows the S&P Exchange Traded Fund, SPY since its inception, on a monthly chart. It starts out with moves 1, 2, 3, and 4, forming a base. Move 4 was the Great Recession. 

Move 5 is usually the biggest and fastest move. This is true of the SPY which has risen in a ten year super bull market. Now it looks like that bull is dead. 

In 2018, the S&P make two distinct tops. It has now make a slightly higher top in 2019. This has formed the pattern traders call "Three drives to a top." It is one of the most reliable patterns signaling the end of a move. 

Move 6 and 7 follow move 5. One way to estimate move 6 is to project it as a duplicate of move 2 or 4. That is shown on this chart. It suggests prices in SPY pulling back to 200-220. In the S&P futures, that is 2000-2200.


This content was published on Dr. Al Larson's Chaos Clinic which you can attend each Friday for free.
Dr. Al Larson has developed a complete Chaos Model of Markets, four unique courses that let you become a Certified Chaos Trader, some very unique eMylar fractal pattern overlays, and tools that permit forecasting individual stocks and markets years in advance. You can also sign up for a free weekly email, and attend a free Chaos Clinic on Fridays. To learn more, click on the author's profile.
Be sure to sign up for the free weekly email! 

Information on this page contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions.

Feed news

Latest Forex Analysis

Editors’ Picks

EUR/USD recovery reaches critical 1.1170 price zone

The EUR/USD pair bounced from a fresh multi-year low of 1.1106, although the advance stalled in the 1.1170 region, with the pair having been unable to extend gains beyond it since last Friday. Bulls to become more courageous if the advance extends beyond 1.1200.


GBP/USD modestly up for the day after flirting with 1.2600

The GBP/USD pair is poised to close in positive ground for the first time in ten days, a result of an extremely overbought dollar and US data giving bulls a reason to take some profits out of the table. Brexit chaos persists, Pound gains unlikely.


USD/JPY trades at weekly lows near 109.70 as risk aversion dominates

The USD/JPY pair met a renewed selling pressure in the American trading hours amid intensifying flight-to-safety and touched its lowest level in a week at 109.68.


Market confidence in doldrums as PMI surveys plummet

US and German PMI surveys failed to muster any form of confidence in the growth picture, with stocks and the dollar under pressure today. The UK political picture looks bleak, with the chances of a no-deal Brexit or general election rising with May’s departure. 

Read more

Gold jumps to weekly tops and retreats, still well bid near $1280 level amid risk-off mood

Gold built on its intraday positive move and spiked to fresh weekly tops, around the $1284 region in the last hour, albeit retreated a bit thereafter.

Gold News