What is the Detrend Price Oscillator?

The Detrended Price Oscillator, also known by its acronym DPO, is an indicator used in technical analysis which is designed to provide information on the price of an asset taking into account fluctuations in the short-term price but no in broader movements in the medium and the long term.

In other words, we can say that the DPO does not take into account the price trend and focuses on fluctuations in the trend. The Detrended Price Oscillator is calculated by subtracting from the current closing price the value of the simple moving average of n days or periods. n (the period for the moving average) is calculated by dividing the period chosen between two and adding one. For example:

  • Period = 20 days
  • Moving Average Period = (20 / 2) + 1 = 11
  • DPO = Close current – SMA (11)
The final result is an indicator that oscillates around zero as a central value. The crossing of the zero level with the indicator will indicate the buying/selling pressure at the short term.

The logic behind the DPO assumes that the price long term trend is composed of short-term trends and because that, by considering only short-term trends is possible to fully understand the long-term trend. Assuming this, extreme peaks and valleys in the DPO are indicative of likely changes in the global trend of the asset.



Interpretation of Detrended Price Oscillator

When this indicator is above the zero line, it means that the price is above its moving average, which is a buy signal. Similarly, when the DPO is below the 0 line, this means that the price is below the moving average, which is a sell signal. However, there are two interpretations for buying and selling signals:

Buy signal

  1. When the Detrended Price Oscillator crosses the zero line upwards.
  2. When the Detrended Price Oscillator is in a confirmed oversold zone, which is proved by the presence of a number of previous low (minimum) of the oscillator, and both the indicator and the price break upward the downtrend line that acts as a resistance.

Sell ​​Signal

  1. When the Detrended Price Oscillator crosses the zero line downwards.
  2. When the Detrended Price Oscillator is in a confirmed overbought zone, which is proved by the presence of a number of previous high (maximum) of the oscillator, and both the indicator and the price breaks downward the rising trend line which acts as a support.
The Detrended Price Oscillator is an effective tool to uncover hidden cycles of overbought and oversold conditions in the market. However, like any technical indicator should be used in conjunction with other tools to validate their signals.


Detrended Price Oscillator or DPO, is an indicator designed to provide information on the price of an asset taking into account fluctuations in the short-term.

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