Detrended Price Oscillator (DPO) Forex Strategy

The Detrended Price Oscillator (DPO) forex strategy is designed on the foundation of spotting cycles by isolating trends in prices.

The strategy combines the Detrended Price Oscillator (DPO.ex4) indicator and the Double Exponential Moving Average (DEMA.ex4) indicator to construct buy and sell signals.

Chart Setup

MetaTrader4 Indicators: Double Exponential Moving Average (DEMA.ex4) (default setting), Detrended Price Oscillator (DPO.ex4) (default setting)

Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily

Recommended Trading Sessions: Any

Currency Pairs: All pairs

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Download the Detrended Price Oscillator (DPO) Forex Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy in the market if the following chart of indicator pattern gets displayed:

  1. If the blue line of the Detrended Price Oscillator (DPO) custom indicator breaks above the 0.0000 level, it is a trigger to go long on our asset of interest. Our buy signal remains valid as long as the DPO line stays above this level. Refer to Fig. 1.0.
  2. If price opens and closes above the red line of the Double Exponential Moving Average (DEMA) custom indicator, it is a signal to place long position(s) on our currency pair of interest.

Stop Loss for Buy Entry: Place stop loss below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions hold sway:

  1. If the blue line of the Detrended Price Oscillator (DPO) custom indicator declines, breaking below the 0.0000 level, it is a valid trigger to exit or take profit accordingly.
  2. Exit or take profit on position(s) if price opens and closes below the red line of the Double Exponential Moving Average (DEMA) custom indicator.

Sell Entry Rules

Enter a sell in the market if the following chart or indicator patterns get displayed:

  1. If the blue line of the Detrended Price Oscillator (DPO) custom indicator breaks below the 0.0000 level, it is a trigger to go short on our pair of interest. Our sell signal remains valid as long as the DPO line stays below this level. Refer to Fig. 1.0.
  2. If price opens and closes below the red line of the Double Exponential Moving Average (DEMA) custom indicator, it is a signal to enter a sell on our currency pair of interest.

Stop Loss for Sell Entry: Place stop loss above resistance.

Exit Strategy/Take Profit for Sell Entry:

Exit or take profit on position(s) if the following rules or conditions hold sway:

  1. If the blue line of the Detrended Price Oscillator (DPO) custom indicator jumps and breaks above the 0.0000 level, it is a confirmation to exit or take profit.
  2. Exit or take profit on position(s) if price opens and closes above the red line of the Double Exponential Moving Average (DEMA) custom indicator as shown on Fig. 1.1.

Fig. 1.1

Free Download

Download the Detrended Price Oscillator (DPO) Forex Strategy

About The Trading Indicators

The Detrended Price Oscillator (DPO.ex4) custom indicator is a technical study that can be deployed in isolating trends in prices, allowing us spot cycles, as such, overbought and oversold regions are consequently obtained.

The Double Exponential Moving Average (DEMA.ex4) was designed by Patrick Mulloy as a tool to better respond to changes in the market than the usual moving averages.

The computation of the DEMA is built around a single exponential moving average and a double EMA.

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