Detrended Price Oscillator (DPO) is a technical indicator that shows the market overbought/oversold states and also can be used for getting buy/sell signals.
It sorts out trends to concentrate on basic price movement cycles. To achieve this, the moving average
transforms into the line and price changes below and above it become a trend oscillator.
This indicator is used to highlight short-term cycles, as the analysis of short-term components of the
long-term cycles can be useful in determining main reversal points of the latter. DPO does not consider long-term prices cycles making
short-term cycles more noticeable.
Author: Nikolay Kositsin
Indicators: Detrended Price Oscillator (DPO)
newdigital, 2013.09.06 19:27
Detrended Price Oscillator
The Detrended Price Oscillator attempts to filter out trend in order to focus
on the underlying cycles of price movement. To accomplish this, the moving
average (generally 14-period) becomes a straight line and price variation above
and below the moving average becomes the Price Oscillator. The Detrended Price
Oscillator technical indicator can show overbought or oversold levels and can
also create buy and sell signals.
The chart of the S&P 500 E-mini Futures contract visually depicts the
Detrended Price Oscillator:
Interpreting the Detrended Price Oscillator
When the Detrended Price Oscillator is above the zero line, it means that
price is above its moving average, a bullish sign. Similarly, when the Detrended
Price Oscillator is below the zero line, it means that price is below its moving
average, a bearish sign. There are two interpretations of buy and sell