Based on the study of historical market data, mostly price and volume of the stocks, technical analysts do analysis. Technical analysis is a safety analysis method for predicting the stock prices and the market trend.
In this piece of writing you will see the picture of renowned moving average, Alligator indicator, which is used by technical analysts to signal absence, formation and direction of the stock market. Bill Williams introduced this technical indicator and named Alligator indicator. Due to the similar behavior observed by Williams in the market trend and the alligator, he suggested this name for the technical indicator. He observed that the alligator wakes up so that it can feed and get back to sleep again. In the same way, in the market, it is observed that most of the time it remains constant only for few times it generates trends. There is one more saying about the alligator that more it sleeps the hungrier it gets. In this regard, stronger the market move will be, when the market is constant for long.
Implementation of Alligator Indicator
The alligator indicator consists of three periods smoothed moving averages that are moved into the future three respective bars. In this indicator, the three periods considered are 13, 8 and 5 whose smoothed moving average is further moved to bars of 8, 5 and 3 respectively. The colors of these bars are blue, red and green showing the jaw, teeth and lips of the alligator correspondingly.
You will notice in the indicator that alligator is in rest position when it is observed that three averages are twisted collectively in a tapered range. You will also find that when the distance between the averages grows to be more then the probability of change in the price of stocks is more.
Ultimately the last and third part of the chart shows that while the slope is moving down then the averages are reversed in order. The blue color average is followed by the red and green averages, which shows the strong signals of selling. This shows the downtrend of the market and technical analysts consider selling the stocks and assets at occurrence of this point.
The gap just before the alligator short signal is indicated by the three aligned moving averages. The technical analysts expect support at the same level, as the prices are filling the gap. An outside bar stops the technical analysts.
It is not that easy to implement the technical indicator by your own, thus you need the help of technical analysts. We hire the best technical analysts, who are experienced in analyzing the market accurately, and delivering the intraday tips and stock future tips with high accuracy. Unlike other financial advisory firms, we do not believe in bluffing people by providing invaluable tips. We understand the risk of losing money and thus we try to give 100 percent accuracy in our calls, so that our clients can generate good profit.