Even though this indicator looks like a classic oscillator, it is not designed for momentum signals. The displaced moving average is set in the past and this is why the DPO is shown in the past. Even with this displacement, DPO peaks and troughs can be used to estimate cycle length. DPO filters out the longer trends to focus on shorter cycles. Chart 3 shows the Nasdaq 100 ETF (QQQQ) with DPO (20) in the indicator window. Looking at the peaks and troughs, we can see a 20-day cycle with the lows in early September, early October, early November and early December. There are roughly 20 days between these lows. The cycle missed in early January.
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