Lower below equilibrium line goes the histogram - more scared is the crowd about current situation. Small fluctuations close to the equilibrium line show that the market is neutral. Basically, it follows the price but the line is adjusted to the volume of trade. PTA line changes insignificantly, when the volume was small. Its value depends not only to the price but also time since last reversal.
Indicator value is calculated on basis of recent highs and lows and time since last reversal.
After some specified number of times new highs or new lows where observed indicator becomes pure function of the price. When indicator line crosses the price line a reversal signal is generated and calculation begins from a new reverse point. This strategy may be especially useful for the options trade, when you want to profit from both up and down moves in price.