Almost all averages can be made as an average with a generalized formula that could be simply written down as : sum of price*(something) / sum of (something). The usual averages that we have are simple moving average (SMA, where the (something) is always equal to 1), linear weighted moving average (LWMA, where the (something) depends on the calculation length), volume weighted average (where the (something) depends on the current volume) and some more ...
This version :
This version is using the range (high-low) of the bar it is calculated for as the weight. That way the bars with higher volatility are getting more emphasized and the response to price changes at those bars is accelerated. Basically, as almost all weighted averages, it is similar to simple moving average with an important difference at the times of high ranges where this indicator is much "faster" than the SMA
You can use the color changes of this indicators as signals