If you're looking to enhance your trading strategy, the Modified Detrended Price Oscillator (DPO) is a fantastic tool to add to your arsenal. This indicator allows you to effortlessly control all the parameters of your Moving Averages (MAs), including the MA period, mode, and applied price. The beauty of this setup is that it transforms the MA curve into a horizontal line, making it a breeze to use as key support or resistance levels in your trades.
How to Calculate the DPO
The calculation for the Detrended Price Oscillator is pretty straightforward:
DPO = close - MA (mode, price, DPO_period)
Here's a quick breakdown of the components:
- DPO - The value of the DPO indicator
- close - The closing price of the selected bar
- mode - The method used to calculate the MA (SMA, EMA, SMMA, LWMA)
- price - The price type used to calculate the MA
- DPO_period - The period for which the MA is calculated
For those of you who prefer using MetaTrader 4, you can find the MT4 version of this indicator at this link.
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