Developed by Bill Williams
Alligator indicator is a combination of three moving average lines that use fractal geometry and nonlinear calculation.
The three smoothed moving averages are:
- The green line (Lips) 5-period Smoothed Moving Average, with a shift of 3 bars into the future.
- The red line (Teeth) 8-period Smoothed Moving Average, with a shift of 5 bars into the future.
- The blue line (Jaw) 13-period Smoothed Moving Average, with a shift of 8 bars into the future.
Lips, Teeth and Jaw show the interaction of different time periods.
When the Jaw, the Teeth and the Lips are closed or intertwined, it means the Alligator is going to sleep or is asleep already. As it sleeps, it gets hungrier and hungrier - the longer it will sleep, the hungrier it will wake up. The first thing it does after it wakes up is to open its mouth and yawn. Then the smell of food comes to its nostrils: flesh of a bull or flesh of a bear, and the Alligator starts to hunt it. Having eaten enough to feel quite full, the Alligator starts to lose the interest to the food/price (Balance Lines join together) - this is the time to take the profit.
Buy and Sell Signals