Alligator (Jaw, Teeth, Lips)

The Alligator (Jaw, Teeth, Lips) is a advanced indicators indicator used in Skyrexio Strategy Builder for advanced market analysis and complex signal generation.

Introduction

The Alligator is a trend identification indicator developed by Bill Williams that uses three smoothed moving averages to distinguish between trending and ranging market conditions. This advanced indicator provides context-dependent signals for both LONG and SHORT opportunities based on market phase identification and trend direction analysis.

How Alligator Works

The Alligator consists of three smoothed moving averages (SMMA) with different periods and forward shifts, designed to identify market phases and trend direction. The indicator gets its name from the way the lines interact - when intertwined, the alligator is "sleeping" (ranging market), and when separated, the alligator is "hunting" (trending market).

Components:

• Jaw (Blue): 13-period SMMA shifted 8 periods forward

• Teeth (Red): 8-period SMMA shifted 5 periods forward

• Lips (Green): 5-period SMMA shifted 3 periods forward

Market Phases: • Sleeping Alligator - Lines intertwined, indicating ranging/consolidating market • Awakening Alligator - Lines beginning to separate, trend may be starting • Hunting Alligator - Lines well separated, strong trending market • Feeding Alligator - Price moves away from all lines, maximum trend strength • Satisfied Alligator - Lines converging, trend ending/exhaustion

Market Psychology: The Alligator reflects market energy cycles. When lines are intertwined (sleeping), the market lacks direction and energy. When lines separate in order (Lips > Teeth > Jaw for uptrend), the market has awakened and is trending. The wider the separation, the stronger the trend energy.

Key Characteristics

Attribute	Details
Category	Advanced Indicators
Type	Trend Identification System
Primary Use	Market phase and trend direction
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, price action, momentum

Strategy Applications

🟢 LONG STRATEGY (Bullish Trend Identification)

Use Alligator for LONG entries when lines are properly ordered (Lips > Teeth > Jaw) and price is above all lines, indicating a strong bullish trend phase.

Base Entry Order (LONG)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Alligator
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (LONG)

Additional Entry 1: Strong trend continuation
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Alligator
Timeframe: 1H

AND

First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 55

AND

First Condition: MACD Line
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 0

OR

Additional Entry 2: Breakout from sleeping alligator
First Condition: Close Price
Timeframe: 1H
Operator: Cross Above
Second Condition: Alligator
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (LONG)

Rule 1: Exit condition - Alligator lines converging (trend weakening)
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: MACD Signal Line
Timeframe: 1H

OR

Rule 2: Exit condition - Price approaching alligator lines
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Alligator
Timeframe: 1H

OR

Rule 3: Exit condition - Overbought with momentum divergence
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75

AND

First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Stop Loss Orders (LONG)

Rule 1: Stop loss - Price falls below alligator (trend reversal)
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Alligator
Timeframe: 1H

OR

Rule 2: Stop loss - Alligator lines crossing (trend ending)
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 0

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Stop loss - Strong momentum reversal
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 35

AND

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Alligator
Timeframe: 1H

🔴 SHORT STRATEGY (Bearish Trend Identification)

Use Alligator for SHORT entries when lines are properly ordered (Jaw > Teeth > Lips) and price is below all lines, indicating a strong bearish trend phase.

Base Entry Order (SHORT)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Alligator
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: Strong downtrend continuation
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Alligator
Timeframe: 1H

AND

First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 45

AND

First Condition: MACD Line
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 0

OR

Additional Entry 2: Breakdown from sleeping alligator
First Condition: Close Price
Timeframe: 1H
Operator: Cross Below
Second Condition: Alligator
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (SHORT)

Rule 1: Exit condition - Alligator lines converging (trend weakening)
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Above
Second Condition: MACD Signal Line
Timeframe: 1H

OR

Rule 2: Exit condition - Price approaching alligator lines
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Alligator
Timeframe: 1H

OR

Rule 3: Exit condition - Oversold with momentum divergence
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

AND

First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Price rises above alligator (trend reversal)
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Alligator
Timeframe: 1H

OR

Rule 2: Stop loss - Alligator lines crossing (trend ending)
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: 0

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Stop loss - Strong momentum reversal
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 65

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Alligator
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe Alligator Analysis

Setup

Timeframe Hierarchy:

• Daily: Major trend direction (alligator phase)

• 4H: Intermediate trend confirmation

• 1H: Entry execution timeframe

• 15m: Fine-tuning entry timing

Execution

Entry: 1H alligator signal confirmed by 4H trend Target: Previous swing levels or alligator extreme Stop: Price crosses back through alligator

Alligator Breakout Strategy

Setup Process:

1. Identify sleeping alligator (lines intertwined)

2. Wait for volume to build during consolidation

3. Enter when price breaks above/below all alligator lines

4. Confirm with momentum indicators

Execution:

• Base Order: Price breakout from sleeping alligator

• Additional: Volume and momentum confirmation

• Take Profit: Trend exhaustion signals

• Stop Loss: Return to alligator lines

Alligator Trend Riding Strategy

Trend Phases:

• Entry: Price moves away from awakening alligator

• Hold: Price stays above/below all alligator lines

• Add: Strong momentum with proper line separation

• Exit: Lines begin to converge or price approaches alligator

Risk Management:

• Never trade against properly ordered alligator lines

• Use alligator as dynamic support/resistance

• Exit when trend phase changes

Risk Management Guidelines

Position Sizing

Strategy Type	Position Size	Conditions
Hunting Alligator	Standard	Clear trend with line separation
Awakening Alligator	Reduced (75%)	Early trend signals
Sleeping Alligator	Avoid	Ranging market conditions
Satisfied Alligator	Small (25%)	Trend ending phase

Alligator Reliability Factors

High Reliability

✅ Clear line separation and proper order ✅ Price well above/below all lines ✅ Volume confirms the trend direction ✅ Momentum indicators align with trend

Low Reliability

❌ Lines intertwined or improperly ordered ❌ Price choppy around alligator lines ❌ Low volume during trend moves ❌ Conflicting momentum signals

Best Practices

For LONG Strategies

1. Proper line order - Ensure Lips > Teeth > Jaw for uptrend

2. Price above all lines - Confirm bullish trend phase

3. Volume confirmation - Validate trend moves with volume

4. Momentum alignment - Use RSI/MACD for additional confirmation

For SHORT Strategies

1. Proper line order - Ensure Jaw > Teeth > Lips for downtrend

2. Price below all lines - Confirm bearish trend phase

3. Volume confirmation - Validate trend moves with volume

4. Momentum alignment - Use RSI/MACD for additional confirmation

Common Mistakes to Avoid

• Trading sleeping alligator - Avoid ranging markets when lines are intertwined

• Fighting the alligator - Don't trade against properly ordered lines

• Ignoring volume - Always confirm alligator signals with volume

• Late entries - Don't chase price far from alligator lines

Market Conditions Analysis

Market Type	LONG Strategy Effectiveness	SHORT Strategy Effectiveness
Uptrend	🟢 High (hunting alligator)	🔴 Low (against trend)
Downtrend	🔴 Low (against trend)	🟢 High (hunting alligator)
Ranging	🔴 Low (sleeping alligator)	🔴 Low (sleeping alligator)
Breakout	🟢 High (awakening alligator)	🟢 High (awakening alligator)
Low Volume	🔴 Low (wait for confirmation)	🔴 Low (wait for confirmation)

Related Indicators

Indicator	Relationship	Link
Moving Averages	Similar concept, different approach	EMA
MACD	Momentum confirmation	MACD
Volume	Trend confirmation	Volume
Fractals	Bill Williams system component	Fractal

Conclusion

The Alligator is a powerful trend identification system that helps traders distinguish between trending and ranging market conditions. Its unique approach of using three shifted moving averages provides clear visual signals for market phase identification and trend direction.

Key Takeaways

• PRIMARY USE: Market phase identification (trending vs ranging)

• SECONDARY USE: Trend direction confirmation with line order

• TERTIARY USE: Dynamic support/resistance levels

• ALWAYS: Avoid trading when alligator is sleeping (lines intertwined)

Success with the Alligator requires understanding market phases and only trading when the alligator is "hunting" (trending). The indicator's strength lies in keeping traders out of choppy, ranging markets while identifying strong trending opportunities.

Ready to Build Your Own Strategy?

Try our free AI-powered Strategy Builder at app.skyrexio.com and start creating professional trading strategies today. No coding required!