Extra indicators
DPO: Detrended Price Oscillator
Removes the trend to show the shorter cycles: how far the price is from a moving average from half a period ago.
The idea in plain words
To see the rhythm of highs and lows without the overall trend, DPO compares the price with a past moving average, so it measures the swing around the trend.
How it is calculated
Subtract from today's close the SMA(N) of (N ÷ 2 + 1) candles ago.
DPO = close − SMA(N)[N ÷ 2 + 1]How to use it
- Measure the typical distance between cycle highs (or lows) to anticipate the next one.
- Overbought and oversold relative to the ticker's own swings.
Drawing conclusions
- Peaks and troughs of DPO line up with the short-term cycle highs and lows.
Example
US30 daily, DPO(20): the last four lows came about 18 sessions apart; the next one is watched around that time.
Prices in examples are illustrative.
Watch out for
- DPO is not meant for trend signals: it deliberately removes the trend.
A little history
A classic cycle tool from the 1980s.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.