Linear Regressions Alligator
Linear Regression Alligator is an indicator that uses linear regressions, and not moving averages, unlike the classic Alligator by Bill Williams. Linear regressions describe the price changes more accurately and have less delay compared to moving averages.
The indicator calculates three linear regressions with different periods and shifts and displays them on the chart. The indicator lines are named by analogy with the prototype: Lips - fast line with the least period, Teeth - middle line, Jaws - line with the greatest period.
- Stable trend recognition from its emergence up to the completion.
- Defining areas where the trend is weakening, and areas where the directional movement is resumed.
- It works on any instrument.
- It works on all timeframes.
- No repaints, no recalculation.
- Lips period, Teeth period, Jaws period - periods for calculating linear regressions - fast, medium and slow.
- Lips Shift, Teeth Shift, Jaws Shift - corresponding regressions shifts.
- To determine the trend. If the slow Jaws line is the farthest from the price bars, the Teeth line is between the fast and slow lines, and the fast Lips line is the nearest to the price chart, then a trend is present in the market. The further these lines are from each other, the stronger the trend. The trend ends, if the lines start crossing prices and each other.
- When no trend is present: when the indicator lines are the price intertwine, the distance between the lines characterizes the volatility of the sideways movement.
- For generating signals: buy/sell by the trend when the trend has been formed. The price crossing the fractal level can serve as a signal confirmation.
- Stop loss for the opened position: can be placed at the middle or slow line.
The indicator keeps the ideas by Bill Williams, however is has certain peculiarities.
Regression periods should be larger than those from the classical Alligator, e.g.: Lips period=20, Teeth period=40, Jaws period=60
Recommended shift parameters are similar to those used in the classical Alligator: Lips Shift=3, Teeth Shift=5, Jaws Shift=8.