Detrended Price Oscillator (DPO) Indicator Explained

The Detrended Price Oscillator (DPO) subtracts a displaced moving average from price — deliberately removing the trend so only the cycle remains. It isn't for trend signals at all: it's a magnifying glass for the market's rhythm.

How It Works

• Price minus an SMA shifted back (N/2 + 1) bars.
• The displacement aligns the average with the cycle it's removing.
• Peaks and troughs in DPO reveal the market's dominant cycle length.

How to Trade It

Measure the bar distance between DPO troughs to estimate cycle length, then time entries near projected cycle lows in the direction of the trend you removed. DPO extremes also work as short-horizon overbought/oversold in flat markets.

Building It in Setup.Cash

Add Detrended Price Oscillator (DPO) in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. Ehlers' Even Better Sinewave automates the cycle-phase reading. For the full category overview, see the advanced momentum library guide.

Momentum signals are timing tools — combine them with a trend or regime filter and backtest the exact rules before going live.