The Alligator indicator is a trading tool that help traders predict trend continuation setups. It uses special numbers called Fibonacci numbers to look at prices over a certain period of time like 5 periods, 8 periods, and 13 periods.
The three moving averages can be seen as the jaw, teeth, and lips of an Alligator:
1. Jaw (blue line): Starts with the 13-candle moving average and is smoothed by 8 bars.
2. Teeth (red line): Starts with the 8-candle moving average and is smoothed by 5 bars.
3. Lips (green line): Starts with the 5-candle moving average and is smoothed by 3 bars.