Greetings dear readers, today I will continue my series of topics on technical analysis, this time on the peculiarities and technical approaches to the three phases of the Alligator indicator.
Phase 1: Rest
The resting phase is probably the easiest to read on the charts, mainly because in this phase the three lines of the Alligator indicator cross repeatedly, an action that in itself corresponds to readings of markets in sideways ranges either in accumulation or distribution zones, so that visually when a market is at rest the jaw, teeth and lips come together, hence this phase has been interpreted as alligator in a resting period, or phase without a definite uptrend or downtrend.
In the following I will show in the price action of the pair KAVA/USDT a behavior with a resting phase of the Alligator indicator, note how in a sideways zone there is a repeated intersection of the three lines of the Alligator indicator.
Phase 2: Awakening
After breakouts of accumulation or distribution zones, and when at a certain moment the market begins to show signs of trend, the crocodile wakes up, similarly in this phase the crocodile opens its mouth and prepares to devour the market until it has eaten enough, visually the green line of the Alligator indicator that represents the lip crosses over the blue (jaw) and red (teeth) lines.
To exemplify the awakening phase of the Alligator indicator, I will show you the price action of the TRX/USDT pair, notice how in the lower left segment of the chart the breakout phase is formed, and then the price action starts an uptrend reaction, which for the purpose of this example shows the awakening of a crocodile.
Phase 3: Lunch
After developing the phase where the crocodile wakes up, i.e. after the break occurs and a defined trend is established, it can be interpreted as the visual analogy of the beginning of the eating phase, and where precisely the crocodile begins to feast or rather to devour the market and obtain attractive profits.
To exemplify the eating phase of the Alligator indicator, I will show you the price action of the BTC/USDT pair, notice how after an uptrend is defined the price drops to the blue line (jawbone) but the indicators do not cross, which for the purpose of this example shows the open-mouthed eating phase of a crocodile.
In the next post, I will be socializing content on how to predict whether the trend will be bullish or bearish when using the Alligator indicator
SOURCES CONSULTED
ForexTraders The alligator strategy – how to use the Alligator in forex trading. Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating image: TradingView
