Alligator Indicator, developed by Bill Williams, is a trend indicator consisting of three smoothed moving averages representing alligator's Jaw, Teeth, and Lips. The intertwining and separation of three lines reflect market consolidation and trending phases.
Jaw (Blue) = 13-period SMMA, shifted forward 8 bars Teeth (Red) = 8-period SMMA, shifted forward 5 bars Lips (Green) = 5-period SMMA, shifted forward 3 bars Where SMMA = Smoothed Moving Average SMMA(n) = [SMMA(n-1) × (N-1) + Price] / N Three-line relationship: Intertwined = Consolidation Separated = Trend
Standard Alligator (13, 8, 5): Bill Williams original parameters
Adjusted Alligator: Parameters adjusted for different markets and timeframes
Alligator States: Sleeping (consolidation), Awakening (trend starting), Eating (trending), Satisfied (trend ending)
Alligator Sleeping: Three lines intertwined, market consolidating, await breakout
Alligator Awakening: Three lines starting to separate, trend may begin
Alligator Eating: Three lines fully separated and aligned, strong trend
Price Above All Lines: Uptrend, Lips > Teeth > Jaw
Price Below All Lines: Downtrend, Lips < Teeth < Jaw
Price Crosses Alligator Mouth: Trend reversal signal
Price Pullback to Teeth or Jaw: Buy/sell opportunity within trend
Alligator Indicator is core of Bill Williams trading system, typically used with Awesome Oscillator and Fractals. When alligator is sleeping (lines intertwined), avoid trading or use range strategies. When alligator awakens (lines starting to separate), prepare to enter. When alligator is eating (lines fully separated), trade with trend. Price pullbacks to alligator's teeth or jaw are entry opportunities within trend. Alligator's shifted nature allows predicting future support/resistance levels.
Clearly identifies trends and consolidation, provides entry and exit signals, part of complete trading system, visually intuitive, can predict future support/resistance
Fewer signals in ranging markets, significant lag, steep learning curve, best used with other Bill Williams indicators, parameter adjustment significantly affects results
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