This paper presents a new algorithm for power transformers protection, based on monitoring the variation of the last samples of the detail coefficients, called detail signals, the first level of decomposition of DWT. In situations of inrush current the variation of the detail signals are close to zero, on the other hand, in case of an internal fault the detail signals have an abrupt variation. Based on these characteristics the proposed algorithm can identify and distinguish the situations of transients in power transformers, mainly situations of inrush current and internal faults. The proposed algorithm has been thoroughly tested for various operation scenarios, showing how the algorithm is fast and efficient in distinguishing the different situations of transient tested.