Detrended 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.
Calculations:
DPO = CLOSE - SMA (CLOSE, (N / 2 + 1))
Where:
SMA — a simple moving average;
CLOSE — the closing price;
N — the period of the cycle (if N is equal to 12, DPO resembles the DiNapoli Detrend Oscillator).
MCP MTF version.
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