How to use the Alligator indicator to understand buy/sell signals

As I have already mentioned above, the Alligator indicator is one of the technical analysis tools extremely useful for trend recognition and fundamentally for executing Buy/Sell trades.

Traders can find buy signals using the Alligator indicator, when a financial instrument after staying for a long time in a sideways zone or accumulation range, the price action breaks some consolidated resistance and if on the chart the green line (lips) of the Alligator indicator starts to rise above the other two lines, with the red line (teeth) going to the middle zone and the blue line (jawbone) to the lower area, this action can be interpreted as a buy signal.

In the following chart, I show you the price action of the OMG/USDT pair with a potential uptrend in progress with buy signal and opportunity, note how the buy signal is generated at the moment the green line has recently crossed the others.

The best way to find sell signals using the Alligator indicator is when a financial instrument after a prolonged uptrend, the price action starts to lose strength and if on the chart the blue line (jaw) of the Alligator indicator starts to rise above the other two lines, followed by the red line (teeth) in the middle and the green line (lips) at the bottom, this action can be interpreted as a sell signal.

Notice how in the price action of the CHZ/USDT pair it projects a potential downtrend in progress with sell signal and opportunity, note how the sell signal is generated the moment the green line has recently crossed into the lower zone.

I hope you have enjoyed the information provided, until the next publication on technical analysis of cryptocurrencies.

SOURCES CONSULTED

ForexTraders The alligator strategy – how to use the Alligator in forex trading. Link

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The cover image was designed by the author: @lupafilotaxia, incorporating image: TradingView