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The Effectiveness of the Double Bottom Pattern in the Investment Decision-Making Process
https://doi.org/10.60154/ZeszytyNaukoweWSEI.2025.21.1.12
Abstract
The purpose of this article is to analyze the effectiveness of the double bottom technical pattern in the foreign exchange market, using the USD/PLN exchange rate in the years 2019-2024 as an example. The study uses daily opening data and a heuristic algorithm implemented in Python, which enables the automatic detection of the pattern. The double bottom formation is defined as two local minima separated by 5-30 trading days and differing by no more than 1% in value. To identify local extremes, a rolling time window of 5 days was applied. The effectiveness of the pattern was assessed based on average returns over a short period following the occurrence of the second minimum. The study results allow for the evaluation of the practical usefulness of this classic pattern and the double bottom formation, as well as the potential of simple heuristic algorithms in automating foreign exchange market analysis.
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Technical analysis , Foreign Exchange (FX) , Decision makingDownload files
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No. 21 (2025)
Published: 2025-12-31
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.