This indicator is a kind of digital filter applied on the prices. It works like, for example, LF/HF filters in the sound processing. In terms of prices it highlights a kind of "carrier wave". In other words this is an attempt to analyze the market as a system of harmonics (you know, all these Fourier transforms and so on).
From the point of view of the result it's an indicator which shows the trend direction (like a pair of short and long moving average), but with very small latency. As you can see on the snapshot - it detects the trend change in 1-4 bars range. However, it's still vulnerable to the market stagnations, so, it would be great to use it together with other indicators.