Detrended Price Oscillator (DPO) is used to point out shifts in long term trends in markets by using a displaced moving average. The DPO does not react to the most current price action and this enables it to efficiently show intermediate term overbought and oversold levels. The DPO measures the difference between past price and a moving average. As prices move above or below the displaced moving average, the indicator oscillates above and below the zero line. Above 0 tends to be viewed as bullish, where below 0 tends to be viewed as bearish.

Calculation:

The DPO is calculated by subtracting the simple moving average over an "x" day period and shifted x/2+1 days back from the price.

To calculate the detrended price oscillator:

Choose the time frame that you wish to analyze. Set "x" as half of that cycle period.

Calculate a simple moving average for x periods.

Calculate (x / 2 + 1)

Subtract the moving average, from (x / 2 + 1) days ago, from the closing price

DPO = Close - Simple moving average[ from (x / 2 + 1) days ago ]