The Alligator indicator was introduced by Bill Williams in his book "New Trading Dimensions: How to Profit from Chaos in Stocks, Bonds and Commodities".
The technical indicator is a combination of moving averages and smoothed using fractal geometry and nonlinear dynamics.
The objective of the indicator is to allow the trader to discern trends or situations trading range.
. The jaw of Alligator smoothed moving average SMA 13 blue line
. Teeth of Alligator smoothed moving average, period 8 - SMA 8 red line
. The lips of the Alligator smoothed moving average, period 5 - SMA 5 Green Line
Trading - Alligator - Rules And Signals
. Buy: An uptrend is signaled if the green line (Lips - short) is above the red line (Teeth-average) is above the blue line (Jaw -Long).
. Sell: A downtrend is indicated if the green line (Lips - short) is below the red line (Teeth-average) is below the blue line (Jaw -Long).
Formula
MEDIAN PRICE = (HIGH + LOW) / 2
ALLIGATORS JAW = SMMA (MEDIAN PRICE, 13, 8)
ALLIGATORS TEETH = SMMA (MEDIAN PRICE, 8, 5)
ALLIGATORS LIPS = SMMA (MEDIAN PRICE, 5, 3)
MEDIAN pRICE - median price;
HIGH - the highest price for the period;
LOW - the lowest price of the period;
SMMA (A, B, C) - smoothed moving average;
GATORS JAW - jaw;
GATORS TEETH - teeth;
GATORS LIPS - lips.
Trading Analysis
Trade Forex - Example
Currency Pair: EUR / USD
Time Frame: H1 - 1 Hour
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