Script Spotlight: Detrended Price Oscillator (DPO) - #CryptoTrading

The Detrended Price Oscillator strategy tool from TradingView is similar to a moving average, but easier to read.
Blog
     · [crypto-technical-analysis]  · Author: KarlVonBahnhof

The feature of today’s Script Spotlight is an older tool that is not groundbreaking or super sophisticated but it will make your chart reading faster.

It is called The Detrended Price Oscillator and it is very similar to a simple moving average.

If you don’t have a TradingView account yet, make one here for free.

If you care for high leveraged trading, you’re probably looking for BitMEX as well, keep your cool though.

Detrended Price Oscillator Strategy by HPotter

Full script

//  Copyright by HPotter v1.0 30/03/2017
study(title="Detrended Price Oscillator", shorttitle="DPO")
Length = input(14, minval=1)
Series = input(title="Price", type=string, defval="close")
hline(0, color=green, linestyle=line)
xPrice = close
xsma = sma(xPrice, Length)
nRes = xPrice - xsma
pos = iff(nRes > 0, 1,
	     iff(nRes < 0, -1, nz(pos[1], 0)))
barcolor(pos == -1 ? red: pos == 1 ? green : blue )
plot(nRes, color=red, title="Detrended Price Oscillator")

Parameters: Length (number of timespans to calculate over, default 14) and Price (candle value input, default Close).

What it does: It takes the price values over the chosen span and calculates a standard moving average from them. It then calculates the difference between the price and the SMA: nRes = xPrice - xsma

The resulting line gets plotted below the chart and the chart’s candles are colored red or green depending on whether the value of the difference is positive or negative.

This is what the Detrended Price Oscillator, or DPO, looks like on a 1D BTCUSD chart. (I changed the default colors for clarity)

barcolor(pos == -1 ? orange: pos == 1 ? lime : aqua )

Does it work?

Of course it does work, there’s no rocket science in this one. You can use it on any timeframe and play with the length of the span.

On the 1W DPO gives an easy single-glance information about the market:

Even better, it is worth noting that the information you get from the color changes is equivalent to the cross of the Bollinger Band middle line on Bollinger Bands of the same length.

Here on a 1W chart for the lengths of 28:

For very long-term crypto charts this is actually more convenient that the bbands, if you are only looking for the position of the price relative to the mean.

You’ll notice I had to switch off the auto sizing on the chart because due to the periods of cryptocurrency bubbles, the lower and upper Bollinger bands shoot too far.

It won’t be a very difficult job to add candle coloring for the lower and upper Bollinger band crosses either, by the way.

Bottom Line

The Detrended Price Oscillator is indeed similar to SMAs. The information is presented by coloring the chart candles though, which means you don’t have to squint your eyes at the chart when investigating trend cycles.

A marginal advantage but if you have a chart with no candle-coloring script in place, this would be a good choice.


This review uses a strategy published to the TradingView community.



Posted in Crypto technical analysis
Tagged as   

Want to *really* learn crypto charting & technical analysis?

Hate to break it to you, but there's no trading school, no neatly structured course and no simple how to.
Read our articles to get familiar with the tools, but try everything hands on. Trading will press your emotions, you can only really learn it as you go.

All the good crypto charting tools and platforms are accessible for FREE in either TradingView app or at Bitfinex. Just start!

Get TradingView Signup at Bitfinex

 

 

Last added to Crypto Airdrops, Bounties & Opportunities
Token and platform Date How to get the airdrop Link
Opportunity: Trade DeFi Tokens with NO FEES 14 days after signup The token exchange WhiteBit gives you 14 days of zero-fee trading if you sign up with a shill link. No KYC until 2 BTC/day withdrawal limit, lots of new DeFi projects get listed there. sign up
Elrond Catalyst Sale 25% Bonus on Bitfinex 10:00am - 10:15am UTC 23rd September 2020 Bitfinex will hold the EGLD token sale on 23rd Sep 2020. Users who want to buy Elrond are invited to pledge the amount they want to purchase. During the 15-minute "contribution window", successful contributors will receive an additional EGLD bonus of 25%. more here
Markaccy Bounty Launch promo Until 30 September 2020 MKCY is a token that is starting to trade on HOTBIT in September 2020. There are weekly social media bounties that must be reported into the linked bitcointalk thread. report here
Cloudbet Turbo Thursday Reload Bonus Every Thursday between 05:00-23:59 UTC Make a deposit of 0.1 mBTC or more today, Cloudbet gives you a 100% Reload Bonus of up to 50 mBTC/1 BCH. Remember you must activate the bonus in your player dashboard before making a deposit for the bonus to be credited! The bonus is only available for the Casino, not the Sportsbook. details
Opportunity: Negative Fees on Vaultoro Gold markets Since 22nd of July 2020 The gold trading platform Vaultoro is now offering negative fees for market makers. The rebate is 0.05% at any traded volume, however it only applies to crypto markets there - not to gold markets. At least the gold fees got cut back to pre-COVID levels on Vaultoro. more here
OKEx Crypto Signup Bonus Bonus for Signup OKEx, formerly called OKCoin and known as OKCasino, was the BitMEX of 2015 but has fallen out of favour since. They are now running a similar campaign as Coinbase did to get their signup rates up: If you sign up and buy 100 USD worth of BTC, you get 10 USD bonus. details