A technical indicator developed by Bill Williams using 3 moving averages based on the median prices.
Overview
The Chaos Alligator Indicator is discussed by Bill M. Williams, PhD in his “Trading Chaos” book(s).
The Chaos Alligator Indicator on the USD/CAD daily chart 4/10/2011
Source: VT Trader
Interpretation
Bill Williams’ “Trading Chaos” book(s) describe some basic (and advanced) concepts for trading using the Chaos Alligator Indicator as part of a larger, more inclusive Chaos-based trading methodology. The basic interpretation is the “sleep” vs. “awake” mode. The alligator is asleep, or the “jaws are closed”, when the moving averages are crossing and tangled. When awake, the alligator “opens its jaw” and the market should be trending.
For a full, detailed description of Bill Williams’ Chaos trading methods, please refer to:
“Trading Chaos: Applying Expert Techniques to Maximize Your Profits” by Bill M. Williams, PhD (1995)
“New Trading Dimensions: How to Profit from Chaos in Stocks, Bonds, and Commodities” by Bill M. Williams, PhD (1998)
“Trading Chaos: Maximize Profits with Proven Technical Techniques” by Bill M. Williams, PhD (2004)
