|
|
| Bill Williams invented the Alligator indicator in 1995 as a visual tool for trend recognition. It consists of three lines overlaid on a pricing chart representing Jaw, Teeth, and Lips. Jaw, Teeth, and Lips are 13-period, 8-period, and 5-period smoothed moving averages moved by 8, 5, and 3 periods into the future, respectively. It is also worth noting that these moving averages are calculated based on median price. When all the lines are intertwined, the market is in consolidation (the alligator is asleep). Conversely, when three lines are stretched apart and moving higher or lower, it denotes a bullish or bearish trend correspondingly (the alligator's mouth is wide open). If the distance between the lines decreases, this may signal the end of the current tendency (the alligator is sated). Line crossings can also signal a trading opportunity. For example, when the Jaw line crosses above other lines, it is a buy signal. And vice versa, the crossing below Teeth and Lips lines by the Jaw line can be considered a sell signal. |
|
|
Williams Alligator
|
Action |
| Price Above Lips(5,3) |
|
| Price Below Lips(5,3) |
|
| Price Crossed Above Lips(5,3) |
|
| Price Crossed Below Lips(5,3) |
|
| Lips(5,3) Above Teeth(8,5) |
|
| Teeth(8,5) Above Jaw(13,8) |
|
| Lips(5,3) Crossed Above Teeth(8,5) |
|
| Lips(5,3) Crossed Above Jaw(13,8) |
|
| Lips(5,3) Below Teeth(8,5) |
|
| Teeth(8,5) Below Jaw(13,8) |
|
| Lips(5,3) Crossed Below Teeth(8,5) |
|
| Lips(5,3) Crossed Below Jaw(13,8) |
|
|
|
| |
