Detrended Price Oscillator(DPO) tells you when the overall market is trending. Then this indicator finds Peaks and support zone.
So that you can buy shares in the support zone in the trending market. Because share price rising and falling like zigzag pattern ( like, the share price will rise then fall a little bit, will take support, then again start rising. Similarly in a falling market, the share price will fall a little bit, will take a support zone, then will start falling again).
Detrended Price Oscillator setting
- Field: Field price is closing, its by default.
- Period: For calculation of DPO indicator It’s required. Here, by default value 14. This means to calculate this indicator 14 candle Price activities will need.
- Moving average Type: by default it’s a simple moving average, but you can change it’s to exponential moving average or etc MA.
- Result: This is the line color of the DPO indicator.
Detrended Price Oscillator calculation
It’s Calculated by the closing price, a specific number of period, and specific period SMA Here, The default specific Period value is 14.
Detrended price oscillator formula= Closing price( N number of period/2+ 1 Period ago) – N number of periods SMA
Detrended Price Oscillator trading strategy
- Generally in the Trending market it works well. In bullish trend after rising share price. if share price fall title bit, then this indicator will Cross 0 line, fall, when indicator tries to bounce back then you can buy this.
- Similarly, in the bearish market after falling share price. If shares price rises a little bit, then this indicator will rise & cross 0 lines. When indicators try to fall again then you can short sell.
- If Trend change when share price falling. Then this indicator will not work.
Conclusion
In trending Market Detrended price oscillator indicator tells you, buy, and sell signal. the share price is rising or falling in a zigzag pattern. when the share price is in a rising trend. after rising share price its falling a little bit. and a similar thing happened to bearish trend.
*Read Related Post for More information.