Combining the Alligator indicator and the Fractals indicator is a powerful way of identifying profitable trading strategies in the market.

If used simultaneously, the two indicators work together to siphon the market movements, allowing you to make accurate trade decisions.

The Alligator

This indicator is helpful in identifying the prevailing trend direction as well as its strength.

It comprises of three moving averages:

• 13-period SMA (Alligator’s jaw)
• 8-period SMA (Alligator’s teeth)
• 5-period SMA (Alligator’s lips)

Here’s a chart with the indicator applied on it.

The indicator is based on three essential aspects of the Alligator’s life: sleep, hunger and satisfaction.

If the beast is asleep (or satisfied), the moving averages will move close to one another, suggesting lack of market activity.

If the beast wakes up, the moving averages will start to move away from one another, suggesting the start of a new trend. This is the right time to initiate trades.

In a market trending upwards, where the jaws are at the bottom while the teeth and lips are on top, it indicates buying opportunities.

In a market trending downwards, where the jaws are at the top while the teeth and lips are below, it indicates selling opportunities.

The Fractals

Simply, Fractals are arrows seen on top or below the candlesticks on a trading chart. Essentially, these indicators can be used for various purposes, including identifying support and resistance levels, determining trade entry and exit points, and determining market trend.

Here’s a chart with the indicator applied on it.

Fractals illustrate market bottoms or tops. The pattern qualifies when:

• At least five consecutive candlesticks appear on the chart, with the highest high candlestick at the center, and two lower highs appearing on every side.
• At least five consecutive candlesticks appear on the chart, with the lowest low candlestick at the center, and two higher lows appearing on every side.

 How to combine them

If the Alligator indicator is showing an uptrend:

• For buy positions to be valid, Fractals should appear on candlesticks above the Alligator teeth. Also, price action should be above the teeth for a minimum of five successive candlesticks.

If the Alligator indicator is showing a downtrend:

• For sell positions to be valid, Fractals should appear on candlesticks below the Alligator teeth. Also, price action should be below the teeth for a minimum of five successive candlesticks.

Here’s an illustration.