Detrend Price Oscillator

The Detrended Price Oscillator is a technical indicator that smoothes the trend in prices. When price is detrended using the detrended price oscillator, many technicians believe that cycles and overbought and oversold levels can be more easily identified. The principal is similar to using longer length technical indicators rather than shorter length technical indicators. It removes some of the 'noise'.

To calculate the detrended price oscillator an x-period moving average is centered. This is done by shifting the moving average back [(x/2) + 1] period. This centered moving average is then subtracted from the close. Because it is set up as an oscillator, it will cross above and below zero. The last [(x/2) + 1] period will have no value. This is because the detrended price oscillator is shifted back [(x/2) + 1] period. The detrended price oscillator may recognize underlying cyclical movements in price.