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Detrended Price Oscillator (DPO)

This Detrended Price Oscillator is intended to remove trend from price. This way it is easier to see cycles in price, because it does not react to the most recent price movements. And it shows levels of overbought and oversold for a medium range in time. It also effective at spotting trend changes in long cycles.

Example

Interpretation

Buy Signals:
If the DPO falls below and then rises back above the oversold level.
If the DPO falls below zero and then rises back above it.
If the DPO creates a higher trough, this is a sign of an up trend.

Sell Signals:
If the DPO rises above and then falls back below the overbought level.
If the DPO rises above zero and then falls back below.
If the DPO forms a lower peak, this is a sign of a down trend.

Calculation

Price ( 20 periods /2 + 1 ) periods ago - the 20 day period simple moving average.

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