When price action is very far away from the bottom or top cloud line, depending on whether it’s a bear or bull market, then price will begin to be considered over sold/bought. How far away does price have to be before a reversal? That depends on the time frame; if you’re looking at an intraday chart then the daily average volatility would be a good estimate of how far price can go away from its cloud before it may reverse.
Whereas in general when price action is above/below the cloud this indicates an up/down trend, also the 21 day lagging line should be above/below the cloud and the fast moving average above/below the slow moving average.
The trend indicator is only complete when all those factors match.
Posted by marketrader2000