Detrended Price OscillatorThe Detrended Price Oscillator (DPO) is an indicator that attempts to eliminate the trend in prices. Detrended prices allow you to more easily identify cycles and overbought/oversold levels.
Used to isolate short-term cycles, Detrended Price Oscillator compares closing price to a prior moving average, eliminating cycles longer than the moving average.
The real power of the Detrended Price Oscillator is in identifying turning points in longer cycles:
- When Detrended Price Oscillator shows a higher trough - expect an upturn in the intermediate cycle;
- When Detrended Price Oscillator experiences a lower peak - expect a downturn.
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