DPO

DPO Indicator
The DPO indicator is a simple indicator that indicates overbought or oversold levels. The Detrended Price Oscillator (DPO) works in the same way as any other momentum oscillator. It oscillates between zero and zero and mentions overbought or oversold areas. Traders can then move into the long or short term.

The indicator is most effective when used on longer time frames (such as weekly or monthly charts). Short term traders can use the DPO to help them identify signals on longer time frames and then open positions on shorter time frames.

DPO Indicator

DPO indicator buy/sell signals
Traders must be alert to overbought or oversold levels to identify buy and sell signals. If the indicator falls towards the 0 mark, it indicates an oversold situation. The trader may enter a long-term or short-term position.

Conversely, if the DPO indicator moves toward +0, it indicates that the Forex pair is in a position to outperform its price. At this point, the trader can enter or exit a short position. Sometimes, the indicator gives wrong signals. It is better to combine this indicator with moving averages or any other momentum indicators (such as RSI and MACD).