It's simpler than that. You would expect price to enter the bands, but once price drops below all the MA's, get out long (it doesn't mean short yet). When all the MA's point down in the correct order, you better be short. MA's are very useful. Bear markets don't just switch from a full bore bullish look (second pic) to a bearish look (first pic). They rock, like you're tipping over a soda machine, before it goes bearish. You get bunching of the MA's many months before (in this case what you see at the end of 2006). Without fail. But don't tell that to people who think MA's are useless.
Since price has already started moving ... so also did the trend. And then once price and the trend reverses ... the MA again will tell you after the fact. Rinse, repeat.
Allow me to science that a bit for you: MA strategies can easily be validated or discredited with backtesting. Yeah. Yeah. That should do it.
Well the slope would determine the trade size if I traded MA's..agreed... ElectricDoesNotTradeSmoothingStuffSavant