The Detrended Price Oscillator (DPO) is an oscillator in technical analysis that estimates the length of price cycles from peak to peak or trough to trough without taking into account existing price trends. DPO is not a momentum indicator like other oscillators. It highlights peaks and troughs in price, which are used to estimate buy and sell points in line with the historical cycle. By highlighting peaks and troughs in price, it estimates buy and sell points in line based on short-term fluctuations in the price of an asset.
Because long-term price trends consist of multiple short-term price trends, long-term trends can be understood by looking at short-term price trends. Therefore, particularly severe peaks and troughs in the DPO indicate that the general trend of asset prices may reverse, and traders should take appropriate actions to take advantage of these reversals in either direction.