The Williams Alligator Meets the Rounding Bottom: The Hidden Forex Formula Pros Don’t Want You to Know

Why Most Traders Get It Wrong (And How You Can Avoid It)

If you’ve ever felt like the Forex market has a personal vendetta against you, welcome to the club. Most traders rely on generic strategies they found in a three-minute YouTube video or an outdated blog post. And then they wonder why their trades collapse faster than a house of cards in a windstorm.

But here’s the truth: There are hidden patterns—insider-only setups—that give you a real edge. Enter the Williams Alligator and the Rounding Bottom pattern. Separately, they’re powerful. Together? They’re a trading cheat code most people overlook.

The Williams Alligator: A Trading Indicator That Eats Profits (Or Losses) for Breakfast

Invented by trading legend Bill Williams, the Williams Alligator is a momentum-based indicator that consists of three moving averages:

1. Jaw (Blue Line) – A 13-period Smoothed Moving Average (SMA) shifted forward by 8 periods.
2. Teeth (Red Line) – An 8-period SMA shifted forward by 5 periods.
3. Lips (Green Line) – A 5-period SMA shifted forward by 3 periods.

When these three lines open wide like an alligator’s mouth, it’s feasting time (aka a strong trend). When they close up, the alligator is “sleeping,” and the market is moving sideways.

But here’s where it gets interesting—pairing this indicator with a Rounding Bottom can turn you into a trading sniper.

The Rounding Bottom: The Forgotten Pattern That Outsmarted the Pros

While most traders obsess over head and shoulders or double tops, the Rounding Bottom is a lesser-known, but incredibly powerful reversal pattern. It signals a shift from bearish to bullish momentum—like when a bad sitcom suddenly becomes a hit (yes, it happens).

How to Identify a Rounding Bottom

1. Gradual Curve Formation – The price slowly moves downward before curling back up like a smiley face.
2. Decreasing Volume at the Bottom – Sellers lose steam as buyers start creeping in.
3. Breakout Confirmation – A strong breakout above resistance confirms the trend shift.

This pattern alone is valuable, but when combined with the Williams Alligator, it becomes a Forex game-changer.

The Hidden Strategy: How to Use the Williams Alligator + Rounding Bottom for Maximum Gains

So how do we turn this rare combo into a precision trading weapon? Here’s a step-by-step guide to executing the trade like a pro:

Step 1: Identify the Rounding Bottom

Look for a gradual, curved decline followed by a slow ascent. Volume should dry up at the bottom, showing sellers are tapping out.

Step 2: Watch the Williams Alligator’s Mouth

• If the Alligator is sleeping (lines intertwined), the market is accumulating.
• If the Alligator wakes up (mouth opens upward), it’s time to pounce.

Step 3: Enter on the Breakout

• Buy when the price closes above the resistance level of the Rounding Bottom.
• Confirm the trade if the Williams Alligator’s mouth is open and pointing upwards.

Step 4: Set Stop-Loss & Target Levels

• Stop-loss: Just below the lowest point of the Rounding Bottom.
• Take profit: Measure the height of the pattern and project it upwards from the breakout point.

Step 5: Ride the Trend (Don’t Get Greedy)

• If the Alligator remains open, hold your trade.
• If the lips cross downward, consider exiting to lock in profits.

Real-World Example: How a Smart Trader Made 250+ Pips Using This Strategy

Imagine trading GBP/AUD (one of the most volatile currency pairs). In early 2024, the pair formed a textbook Rounding Bottom on the 4H chart. At the same time, the Williams Alligator’s mouth opened wide right at the breakout level.

Result? A 250-pip rally in three days.

Final Thoughts: Why This Strategy Works When Others Fail

Most traders blindly follow indicators without understanding the psychology behind them. The Williams Alligator + Rounding Bottom combo works because it aligns market structure with momentum.

By the time retail traders recognize the reversal, you’ll already be riding the wave.

Want to master even more hidden trading strategies?

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Image Credits: Cover image at the top is AI-generated