Alligator Indicator
Technical IndicatorsA trend indicator developed by Bill Williams consisting of three smoothed moving averages (Jaw, Teeth, Lips) with different periods and forward shifts. When the lines intertwine, the "Alligator is sleeping" (range). When they fan out, it is "eating" (trending).
What Is the Alligator Indicator?
Bill Williams' Alligator uses three smoothed Moving Average lines, each representing a different timeframe: the Jaw (13-period, shifted 8 bars forward, typically blue), the Teeth (8-period, shifted 5 bars forward, typically red), and the Lips (5-period, shifted 3 bars forward, typically green). The forward shifts are key since they help the indicator align with fractal geometry concepts that Williams applied to trading.
Reading the Alligator
When all three lines are intertwined and crossing each other, the Alligator is "sleeping," meaning the market is range-bound and you should avoid trend trades. When the lines separate and fan out in order (Lips on top, then Teeth, then Jaw for uptrends, or reversed for downtrends), the Alligator is "eating" and a strong trend is underway. The wider the separation between the lines, the stronger the trend.
Trading the Alligator
Enter when the Alligator wakes up: the Lips cross above both Teeth and Jaw (bullish) or below both (bearish), and all three lines begin fanning out. Place your stop-loss at the Teeth line. Exit when the Lips cross back through the Teeth, signaling the trend is losing momentum. This works well on EUR/USD and GBP/USD daily charts. Williams recommended combining the Alligator with his Awesome Oscillator for confirmation, creating a complete system that identifies both when and how strongly to trade.
Related Terms
Moving Average
A widely used indicator that smooths price data by calculating the average closing price over a specified number of periods. Moving averages help identify trends and potential support/resistance levels.
Awesome Oscillator
A momentum histogram created by Bill Williams that shows the difference between the 5-period and 34-period simple moving averages of bar midpoints (average of high and low). Green bars indicate increasing momentum; red bars indicate decreasing momentum.
Ichimoku Cloud
A comprehensive Japanese indicator that defines support and resistance, identifies trend direction, gauges momentum, and provides trading signals, all in one chart overlay. The "cloud" (Kumo) is the shaded area between the Senkou Span A and Senkou Span B lines.