Detrended Price Oscillator (DPO)

Price with the trend removed, so the cycles stand out.

What it measures

How far a past close sat above or below the moving average. Comparing a close from half a window back with the current average takes the slow trend out and leaves the shorter swings.

How traders read it

Traders use it to measure the length of cycles, peak to peak or trough to trough, rather than as a signal on the latest bar: it is drawn shifted back in time, so its right-hand end is always half a window old.

Formula

displacement = floor(periods / 2 + 1)
DPO = close(displacement bars ago) − SMA(periods)

Both the DPO and the SMA are drawn displacement bars back on the chart.

Settings and output

Call: dpo(periods)

Setting	Chart default
`periods`: Periods	20

What you get: a list of 2, in this order: 1. a number (“DPO”); 2. a number (“SMA”).

Warm-up: with dpo(20), it asks for 20 bars of history and a run-up of 1, and its first value came on bar 21 of the example data.

Chart

Detrended Price Oscillator (DPO) drawn by its own code on example prices

The prices are made up, hourly, and the same on every page, so the chart shows how the indicator behaves, not how a market behaved.

In an algorithm

function onIntervalClose() {
  const lines = dpo(20);
  log("DPO", lines[0], "SMA", lines[1]);
}

It gives [dpo, sma]: the oscillator and the average it was measured against.