Alligator indicator consists of 3 indicators Moving Average:
- Alligator’s jaw (blue line) is the Simple Moving Average period of 13, from (High + Low) / 2, and will move forward 8 chart lines;
- Alligator teeth (red line) is Simple Moving Average period 8, from (High + Low) / 2, and will move 5 bar chart ahead;
- Alligator lip (green line) Simple Moving Average period – 5-, from (High + Low) / 2, moved forward 3 bar chart.
How to add Alligator indicator to Metatrader :
Menu -> Insert -> Indicators -> Bill Williams -> Alligator
Alligator indicator serves to help determine whether there is no direction of market direction. For uptrend to be true and valid if 3 rows (jaw, teeth and lips) Alligator indicator should be in position: Jaw in bottom (blue), then teeth (red), then lip (green) on top.
As for the downtrend the 3rd position of the moving average line is as follows: jaw on top (blue), teeth (red), then bottom lip (green)). If the line is intertwined or located in the wrong order or move closer and together, it means that Alligator is sleeping with his mouth closed. in this position is not allowed to open position.
When Alligator is asleep then he becomes hungry. The longer he sleeps in a state of hunger then he becomes the longer the market remains unchanged, the harder it will get into a new trend.
When this trend starts, Alligator wakes up and opens his mouth (3 lines go inside and starts to move apart) – this is the time to start trading with a trend. When the Alligator is full and happy, he closes his mouth and goes back to sleep – 3 lines move closer and interlock.
Elliott wave trader can use Alligator as an indicator to help identify impulsive and corrective waves: when market price is outside Alligator’s mouth, impulsive wave is formed, and when market price in Alligator’s mouth, corrective waves is formed.
remember, do not feed Alligator while sleeping !!!