Bill Williams’s indicator

Bill Williams’s indicator


Bill Williams’s indicator – Alligator is a combination of three balance’s lines:
Alligator’s jaws (blue line) – 13-period smoothed moving average built at the median price (High + Low)/2, moved into the future by 8 bars;
Alligator’s teeth (red line) – 8-period smoothed moving average built at the median price (High + Low)/2, moved into the future by 5 bars;
Alligator’s lips (green line) – 5-period smoothed moving average built at the median price (High + Low)/2, moved into the future by 2 bars.

In order to add Alligator indicator to MetaTrader 4 chart, you need to go Menu – Insert – Indicators – Bill Williams – Alligator.
Alligator indicator helps to determine the presence or absence of the trend as well as its direction.

If all three lines are interlaced, then Alligator is “sleeping”. At this time the market is traded in the small price bracket (flat), having taken away the trader’s profit earned on the last price change. The longer Alligator sleeps, the hungrier it is, and stronger will be the following price movement. While Alligator sleeps, you should not open new trades. When Alligator awakes it opens jaws (lines of the balance diverge) and starts to hunt for food. Having eaten enough, Alligator falls asleep again (lines of balance join together). If Alligator does not sleep, there is an upward or downward trend (the food runs away from Alligator): if the price is higher than Alligator’s jaws – the trend is upward; if the price is lower than Alligator’s jaws – the trend is downward.

Alligator can be used as a helping indicator to identify Elliot waves. If the price is outside Alligator’s jaws, the impulsive wave is forming at market, when the price is inside Alligator’s jaws, the corrective wave is forming.

Alligator formula:
Median price = (High + Low)/2
Alligator’s jaw = SMMA (Median price, 13,
Alligator’s teeth = SMMA (Median price, 8, 5)
Alligator’s lips = SMMA (Median price, 5, 3)
High – the maximum price of the bar;
Low – the minimum price of the bar;
SMMA (A, B, C) – smoothed moving average (A – smoothed data, B – period of smoothing, C – movement into the future)
Alligator’s jaws (blue line);
Alligator’s teeth (red line);
Alligator’s lips (green line).



More FOREX-news on pages InstaForex.Com