Alligator Indicator
The Alligator indicator, developed by Bill Williams, uses three smoothed moving averages offset into the future: the Jaw (13-period, offset 8), Teeth (8-period, offset 5), and Lips (5-period, offset 3). The metaphor is that markets trend (the alligator eats) about 15-30% of the time and range (sleep) the rest.
How the Alligator Is Used in Trading
When the three lines are intertwined (tangled), the "alligator is sleeping" and the market is range-bound. Traders avoid entering positions during this phase. When the lines separate and fan out in order (lips on top for uptrend), the "alligator is eating" and trend-following entries are appropriate.
The order of the lines indicates trend direction. In an uptrend, Lips (fastest) is above Teeth, which is above Jaw (slowest). In a downtrend, the order reverses. The wider the separation between the lines, the stronger the trend, similar to how ADX measures trend strength.
Bill Williams recommended combining the Alligator with his other indicators (Fractals, Awesome Oscillator, AC Oscillator) for a complete system. However, the Alligator alone is valuable as a trend filter in algorithmic strategies, keeping traders out of choppy, range-bound markets.
Access via API
curl -H "X-API-Key: YOUR_API_KEY" \
"https://tickatlas.com/v1/indicator?symbol=EURUSD&indicator=alligator&timeframe=H4"Returns Jaw, Teeth, and Lips values for market phase identification.