It is mainly composed of two moving averages of ATR. One fast moving, which looks back at the previous 5 periods. One slow moving, which looks back at the previous 21 periods. Both ATRs have been normalized (show percentage instead of an absolute amount). The third component of this indicator is the histogram that is created by subtracting the slow moving average, from the fast moving average.
By having two ATRs of different lengths, traders can see how short term compares to long term , and how it is shifting over time. When the fast-moving crosses above the slow-moving, it will show a positive value on the histogram, meaning that short term is increasing and higher than normal. When it crosses below, it will show a negative value on the histogram, meaning that short term is decreasing, and lower than normal.
There are a variety of ways to utilize this indicator, and it will work in most markets. I find it is best to analyze macro market conditions on and above, rather than micro intraday moves.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.