DPO (Detrended Price Oscillator)

NCDindia

Active Trader
Jun 25, 2015
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he Detrended Price Oscillator (DPO) is a Local VTL Script designed to remove trend from price and make it easier to identify cycles. DPO does not to the last date because it is based on a displaced moving average a momentum oscillator. Instead, DPO is used to identify cycles highs and estimate cycle length.

De trended Price Oscillator eliminates the trend effect of price movement. This simplifies the process of finding out cycles and levels of outbidding/resale.
Long-term cycles consist of several shorter cycles. Analyzing such short components helps to define crucial moments of the cycle's development. DPO gives a chance to eliminate the influence on prices of long-term cycles.

To calculate DPO you should take a certain period. Remove cycles that are longer than the chosen period from price dynamics, and leave shorter cycles. Half of the cycle's length is used for smoothing. We recommend using a period of 21 or less.
The bounds (overbought/oversold levels) come from the history of previous behavior of prices. It is recommended to stand in a long position if DPO first falls below the resale level and then gets above it. Crossing of the zero point from above followed by a rise above that level is also a signal for opening a long position. Everything is vice versa for short positions.
 

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NCDindia

Active Trader
Jun 25, 2015
13
0
27
The Detrended Price Oscillator indicator (DPO) is a client side VTL Script used to remove trend from price in Vertex Fx Chart. This is done in order to identify and isolate short-term cycles. DPO is not typically aligned with the most current prices. It is offset to the left (the past) which helps to remove current trend. Because it is offset to the past, the DPO is not considered a momentum oscillator. It only measures past prices against a Simple Moving Average as a way to gauge a cycle's high/low range as well as typical duration.
The Detrended Price Oscillator indicator (DPO) compares past prices to a displaced (shifted to the past) Simple Moving Average. The SMA is displayed a Zero Line, with DPO fluctuating between positive (above the line) and negative (below the line) values. Simply put, a positive values means that price was above the SMA and a negative value means price was below the SMA.