Take a look at this chart:
We can see the following data:
USD is at the top, it fell for some days, gone back up, it's flat now and could fall again for some days or go up, since it's so strong we can risk and buy even when it's flat against those that are falling.
JPY is the second at the top, and increasing fast, as seen in the topic chart, CADJPY is falling, and almost all pairs are losing against the yen since it's rising.
CHF is the third and it's also increasing fast, again, most pairs have lost against CHF these days or have ended with sideways movement. This is an excellent currency to invest into, but buying it against USD or JPY is risky, since both are also increasing in value.
NZD is the fourth, and we see it's falling, NZD pairs were mostly sideways and are now reversing since NZD is now falling.
AUD is the fifth, It's been falling quite fast and now has stopped a bit, could be dangerous to keep selling it, but it also has more room to fall so it's a small bet.
GBP is the sixth, moving slowly up with sideways movement, GBPAUD , GBPCAD and GBPNZD are good buys, but it would be VERY risky to buy GBP against any of the other three since they are stronger AND rising.
CAD is the seventh, falling hard still searching for a bottom, weakest currency of them all, at seventh place and falling, still it would be risky to sell it against NZD or AUD, since those are also falling.
EUR is the last, but rising alongside GBP (those two are correlated after all), problem is that EUR is still very weak and it would be a gamble to buy it against USD, JPY or CHF, but it might be a good bet against CAD, AUD or even NZD...
I hope that this idea explains the reasoning behind the indicator and how to use it. A better setup is to use analysis using it, like I do, here's a link to a spreadsheet I use to keep tabs on the daily direction:
Then enter the 1 hour or 30 min charts and look for a movement that matches the direction of the trades in the daily, and only then enter the trade, this will hopefully help you avoid bad trades, since in many reversals the daily trend keeps, but there really isn't any opportunity to enter in the smaller Timeframes.
If you like trying to pick reversals, then pick the currencies at the extremes and pray they go all the way in the opposite direction, like CADJPY here in march
They didn't crossover to the other extreme, but it was a nice temporary reversal.