Detrended Price Oscillator Indicator MT4 | MT5

The DPO indicator is a momentum oscillator designed to highlight short-term price movements over the long-term cycles. It shifts back the SMA over the past period (n) by the closed price of the ((n/2) + 1bar) period. Its formula is as follows: DPO = Price ((n/2) + 1bar) - SMA(n)

By applying this indicator on the MetaTrader chart, it helps traders spot selling or buying entries, and identify potential trend reversals.

• Entry points:

- If the DPO breaks above the zero level, during an upward trend, it signals a buying opportunity.

- If the DPO breaks below the balance line, during a downward trend, it signals a selling opportunity.

• Potential reversals:

- Bullish divergence: When the price forms lower lows, while the indicator prints higher lows, indicating a bullish reversal.

- Bearish divergence: When the price reaches higher highs, while the DPO presents lower highs, signaling a bearish reversal.  

To make accurate trade decisions, it is recommended to combine this indicator alongside other categories of technical analysis indicators, such as volume-based and trend-following.

In the first trading example on the MetaTrader 4 chart, during the downtrend, when the DPO breaks below the zero line, it signals a continuation of the bearish movement and another short opportunity. Toward the trend's end, the price forms lower lows as usual, but the indicator presents higher lows, suggesting a potential bullish divergence. As the indicator rises above the balance level, it signals a buying opportunity and the beginning of the bullish momentum. 

In the second trading example on the MetaTrader 5 chart, during the uptrend, when the DPO breaks above the balance line, it signals a continuation of the bullish momentum and another long opportunity. Near the trend's end, the price forms higher highs as usual, while this time, the indicator forms lower highs, suggesting a potential bearish divergence. When the indicator falls below the zero level, it signals a selling opportunity and the start of the bearish movement.

In real-time trading, traders should use this indicator wisely, to make precise entry and exit points. To avoid confusion, combine it with the other categories as I mention in the long description.