| The Detrended Price Oscillator (DPO) helps eliminate the trend component of a security's price movement, allowing traders to identify short-term cycles and potential reversals better. The indicator oscillates above and below the zero line, with positive readings indicating that the price is trading above the historical average price and negative readings indicating that the price is trading below the historical average price. Traders can use the DPO to identify potential reversals and confirm a current trend's strength. However, it is essential to note that the DPO may be less effective in identifying longer-term trends, as it is based on a moving average that is shifted backward. |
