Alligator and Fractals Indicators

The Alligator and Fractals indicators are popular tools in technical analysis, often used together to identify trends and potential turning points in the market. The platform offers both these indicators, allowing traders to leverage their features for better decision-making.

Alligator and Fractals Indicators

1. Alligator Indicator:

   • Developed by: Bill Williams.
   • Purpose: The Alligator indicator is used to identify trend directions and the potential beginning of new trends. It consists of three moving averages:
     • Jaw (Blue line): 13-period Smoothed Moving Average, shifted by 8 bars into the future.
     • Teeth (Red line): 8-period Smoothed Moving Average, shifted by 5 bars into the future.
     • Lips (Green line): 5-period Smoothed Moving Average, shifted by 3 bars into the future.
   • How it works:
     • When the lines are intertwined, it means the Alligator is “sleeping,” indicating a sideways market or lack of a clear trend.
     • When the lines start to separate and fan out, the Alligator “wakes up,” suggesting the start of a new trend.
     • The direction of the lines (up or down) indicates the direction of the trend.

2. Fractals Indicator:

   • Purpose: The Fractals indicator is used to identify potential reversal points in the market.
   • How it works:
     • A bullish fractal appears when there is a pattern with the lowest low in the center and two higher lows on each side.
     • A bearish fractal appears when there is a pattern with the highest high in the center and two lower highs on each side.
   • Fractals serve as breakout points, and their positions can be used as support and resistance levels.

Using Alligator and Fractals

1. Adding the Alligator Indicator:
   • Open the platform and select the asset you want to analyze.
   • Click on the Indicators menu and search for “Alligator.”
   • Apply the Alligator indicator to your chart. You’ll see the three moving average lines representing the Jaw, Teeth, and Lips.

2. Adding the Fractals Indicator:
   • While in the same chart, go to the Indicators menu again and search for “Fractals.”
   • Apply the Fractals indicator to your chart. Fractals will appear as small arrows above (bearish fractal) or below (bullish fractal) the candlesticks.

Trading Strategies with Alligator and Fractals

1. Trend Following Strategy (Alligator):

   • Entry: Enter a trade when the Alligator “wakes up,” with the lines clearly fanning out in the direction of the trend (upwards for a buy, downwards for a sell).
   • Exit: Exit the trade when the Alligator lines start to cross each other, indicating a potential end to the trend.

2. Fractals Breakout Strategy:

   • Bullish Setup: When a bullish fractal forms, wait for the price to break above the highest point of that fractal to confirm the breakout.
   • Bearish Setup: When a bearish fractal forms, wait for the price to break below the lowest point of that fractal to confirm the breakout.

3. Combining Alligator and Fractals:

   • Confirmation of Trend: Use the Alligator indicator to confirm the trend’s direction. Once a trend is identified, use the fractals as entry points.
   • For example, in an uptrend (as indicated by the Alligator), you could look for bullish fractals as buy signals.
   • In a downtrend, you would look for bearish fractals as sell signals.