In an effort to identify an  price cycles, the DPO concentrates on peaks and troughs in price trends. It is useful in estimating the length of price cycles by measuring peak to peak or trough to trough movements. It can propose buy/sell levels that line up with the historical cycle uncovered. High points in the oscillator correspond to peaks in price. Low points correspond to troughs in price.

Examples: If you discover troughs have been about two months apart in the past it may help you with buy/sell levels for the future as you examine a recent trough. Future peaks might be seen as selling opportunities or future troughs as buying opportunities.