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Alligator Indicator Forex Technical Analysis and Alligator Indicator Forex Trading Signals

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.

 

Alligator Indicator

 

 

Lips, Teeth and Jaw show the interaction of different time periods.

 

 

Forex Technical Analysis and Generating Forex Trading Signals

 

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.

 

Technical Analysis of the Alligator Indicator- Buy Sell Signals

Buy and Sell Signals

Market Sentiment: Did you know that traders and market participants have been buying US Dollars because USD is the best currency to hold when there is a recession – this is because the dollar is held as the reserve currency by most central banks and during recession most traders also prefer to hold this currency, this is why USD is known as a safe haven currency. But now the market sentiment has changed and all the economies are on their way to recovery and most have even returned to economic growth based on the economic reports coming from these countries.

During times of economic growth traders prefer to sell the dollars they had bought and start buying higher yielding currencies. These higher yielding currencies include EURO and Great Britain Pound. This is why the Euro is starting to appreciate against the USD. The EURUSD is trending upwards; Crude Oil Prices have also started to move back up because demand of oil is growing because of the global economic growth, Gold is also in an upward trend because during economic growth the prices of commodities also go up because there is increase in their demand.

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