The Detrended Price Oscillator
("DPO") attempts to eliminate the trend in prices. Detrended prices allow you to
more easily identify cycles and overbought/oversold levels.To calculate the DPO, you
specify a time period. Cycles longer than this time period are removed from prices,
leaving the shorterterm cycles. To calculate the
Detrended Price Oscillator, first create an nperiod simple moving average (where
"n" is the number of periods in the moving average).
Now, subtract the moving average "(n / 2) + 1"
days ago, from the closing price. The result is the DPO.
DPO = Close – (Moving Average
"((n/2)+1)" days ago)
The DPO would be shown the same way as the moving average
graph where the user can provide the value of n.
