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The massive price increase seems to coincide with a bull market in gaming and metaverse tokens.
In November, Gala Games’ in-house currency, GALA, increased by about 350 percent, despite declines in the top cryptocurrencies, including Bitcoin (BTC). Between November 1 and November 22, the price of GALA increased from $0.088 to $0.42.
The increases in GALA were mostly due to a price rally across a wide range of gaming and metaverse crypto assets. MANA, the native currency of Decentraland — a blockchain-based virtual world where users can create, experience, and monetise content and applications — has risen by more than 30% month to date.
In November, the price of SAND, the primary asset of the Sandbox, a decentralised metaverse project, more than doubled.
Dvision Network (DVI) and Ultra (UOS) are two gaming projects that have seen a 100 percent increase in value.
Rally or correction ahead?
After Facebook opted to rebrand its parent company to Meta, with CEO Mark Zuckerberg declaring that they will be “metaverse” — not social media — first, the upside moves in metaverse and gaming tokens gained traction.
During the metaverse boom, GALA, whose issuance firm Gala Games creates blockchain-based games, hit a new high of $0.489 on Nov. 22. Despite this, the cryptocurrency revealed flaws in its bullish momentum, painting a dreaded head and shoulders (H&S) structure.
One of the most widely known and trusted technical patterns, H&S, appears when the price forms three peaks in a row, with the middle one, called the head, higher than the other two, called the shoulders. Meanwhile, the three peaks have the same support level, called the “neckline.”
On its shorter-timeframe chart, GALA’s p fmed the left shoulder near $0.39, corrected lower towards its rising neckline support, rebounded towards $0.48 to form the head, got pulled back again towards the same neckline, and has now been recovering to form its right shoulder top, potentially near $0.43.
As GALA closes below the neckline with convincing volumes, a breakout confirmation will appear. If this occurs, the Gala Games cryptocurrency’s downside target will be shifted to a length equal to the maximum distance between the top of the head and the neckline.
This might push GALA down to $0.24, or 34% below the possible breakout threshold.
Bearish divergence/Bull Flag
In addition to H&S, GALA showed a clear divergence between its rising prices and falling momentum.
Notably, the cryptocurrency’s price formed a string of higher highs. In contrast, its relative strength index (RSI), which measures the magnitude of price changes to evaluate an instrument’s overbought or oversold conditions, formed lower highs, as shown in the chart below.
The GALA bull run also coincided with a decrease in trading volumes, signifying that its price uptrend did not have strong underlying momentum.
As a result, GALA confirmed bearish divergences between its rising price and falling trading volume, doubling down the H&S setup as discussed above. On the other hand, the entire bearish outlook risked invalidation should the price confirm a potential bull pennant setup instead, as shown in the chart below.
The profit target for the bull pennant sits near $0.69, given GALA breaks out of its triangle range to the upside with a rise in trading volume.