If the price is above the blue line - this is uptrend. If the price is below the blue line - it is downtrend.
If the low candlestick is above the line - you should open a long position (and close a short position, if open). If the high candle is below the line - you should open a short position (and close a long position, if open). Reverse trading.
Crossing
A crossing is defined as an event, when the whole candle is above the line (high > line), or below the line (low < line). This method greatly reduces the number of false signals.