This strategy was derived from Jean Marc Guillot's IFTA trading strategy, John Bollinger's trading rules, and ATR signal line from myself (Joe Baus).
A trend can be interpreted as beginning once the Signal Band has entered either trending cloud.
If the Signal Band is not touching either trending cloud, then the market is defined as ranging. When price deviates into the Bullish or Bearish Cloud, reversal trades can be taken so long the Signal Bands are not in the trending clouds.
Isn't this just a 21 EMA trading pull-backs strategy?
No. The 21 EMA alone is not sufficient in my opinion to define a range or trend technically. Always buying the 21 EMA pull-back, especially in a range, is not a great strategy by itself unless you've already identified price as trending. Baus Bands adds that trend and range identification.
What's the purpose of the ATR band around the 21 EMA?
Sometimes price will open and close below the 21 EMA and cause some technical analysts will say the trend is over. I added the ATR specifically to get a volatility based, upper and lower bound range around the 21 EMA . that way I have an acceptable price range where price could move past the 21 EMA and still keep a trend valid using similar rules. I then saw that so long this ATR band (not the 21 EMA itself) was touching those trending clouds, then the trend has a good chance of continuing as long as that was true.