Alligator Indicator

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The Alligator Indicator is a popular tool created by Bill Williams. It uses three moving averages (referred to as the “Jaw,” “Teeth,” and “Lips”) with different lookback periods and forward offsets. By combining these three lines, the Alligator helps traders visually identify market trends, potential turning points, and periods of consolidation.

Jaw (blue): The longest moving average, shifted the farthest forward.
Teeth (red): A medium-length moving average, shifted moderately forward.
Lips (green): The shortest moving average, shifted the least.
When these lines “open up” and separate, it suggests a strong directional move (the Alligator is “awake and feeding”). When they converge or overlap, it indicates market indecision or consolidation (the Alligator is “sleeping”). Traders often watch for crossovers between these lines to identify potential trend reversals or breakout entries. This indicator can be combined with other tools (like momentum or volume analysis) to help confirm trade signals.