The indicator computes bands at a multiple of atr around a median price, then locks the relevant band as a trailing stop that only moves in the favourable direction. When price closes beyond it, the line flips to the other side and the indicated direction reverses.
Its appeal is clarity: one line, one colour, always long or always short. It works reasonably as a trailing exit in trending conditions, which is its most defensible use.
In ranges it flips constantly and produces heavy whipsaw, and because it is always in the market it has no concept of standing aside. It is also sensitive to its two parameters, and choosing them from past performance is a direct route to overfitting.
Related: atr, chandelier-exit, trend-following, whipsaw, overfitting