GALA Update: Corrections and a Bullish PerspectiveIn yesterday's idea, I suggested that GALA’s correction was forming a descending triangle, a bearish continuation pattern as illustrated above. However, with more price action now available, it appears the correction is more accurately forming a descending channel, which has a bullish bias. The key takeaway? Corrections are dynamic—it's crucial to forecast but stay flexible and adapt as new data emerges.
Recap of the Last Idea:
In my previous idea, I zoomed down to the 30-minute chart to better analyze the correction and predicted that price would test the monthly support at $0.04358. This played out as expected, reinforcing my bearish view at the time. Knowing the correction would unfold overnight, I avoided taking on risk and focused on accumulating during the downtrend.
As the price broke down from the descending triangle, it quickly recovered, bounced back into the pattern, and found resistance. Initially, I thought it was a false breakdown, but on closer inspection, it now looks like a descending channel, which aligns with my bullish macro outlook.
Trading Framework Based on Stochastic RSI
Daily Stochastic RSI: Still in bearish momentum but nearing a turnaround point. This supports the view that the correction is nearing its end.
4-Hour Stochastic RSI: The K-line has crossed the D-line, signaling bullish momentum. However, I’m holding off on entering a longer-term trade until the daily RSI confirms bullish momentum.
Short-Term Trading Plan
Both the 2 hour and 30 minute timeframes show Stochastic RSI in the overbought region, indicating short-term bearishness. This suggests we might see price test the bottom of the channel before breaking to the upside.
This fits well with my larger narrative, where the daily momentum indicators suggest a bullish breakout is likely after this temporary retracement.
Final Thoughts:
Corrections are complex and fluid—this shift from a descending triangle to a descending channel highlights the importance of staying adaptable. For now, I expect short-term bearishness before a bullish breakout, making this a critical moment to observe price action at support levels within the channel.
If you like this idea please like, and follow if you would like regular updates on Gala.
