The detrended price oscillator (DPO) is unlike other oscillators, such as the Stochastic or MACD the DPO is not a momentum indicator. It instead highlights peaks and troughs in price, which are used to estimate buy and sell points in line with the historical cycle.
These Peaks and bottoms have a pattern of happening between 30-60 candles however this will vary depending on your timeframe, you can normally align support and resistance points on the DPO in the same way you would on a price chart.
This is the traditional way of using the DPO however we like it for Divergence signals and a simple trend detection, if it's above 0, its remains bullish, below is bearish
This simple trend detection is actually very profitable on higher time frames. For example if you simply bought when DPO crossed above 0 and shorted when it dropped below on Ethereum since 2015, you would have a return of 10,445,400% compared to buying and holding since the start, Eth has done 103,000% (at the time of writing). Sometimes you don’t need to overcomplicated it.
You have the ability to change the DPO lengths, including its source.
You can change the colour of the DPO in the settings.
To set an alert, toggle the alert button in the DPO section of the settings, you will notice you have a few options:
- Crossing 0
You can also adjust the frequency the alerts are sent, we recommend using ‘once per bar close’ for these alerts.