The Reversal Bands help to indicate when a market is showing oversold or overbought signs and where it may potentially reverse. Some of the calculations to create these bands entail derivatives of averages. This then helps us pin point Reversal Patterns.
We can see in the below screenshot highlighted examples of when the market/candles reach the top or bottom of the cloud. We normally can expect a pullback or a reversal eventually. We can see in the below examples that a pullback or a reversal occurred eventually.
The Reversal Bands work on every time frame but for the most entries use lower timeframes.