Popular crypto analyst Ali, known on Twitter as @ali_charts, has issued a warning to Ethereum investors about the potential for a steep price correction. According to Ali’s technical analysis, a breach of the critical $3,400 support level could spell trouble for the world’s second-largest cryptocurrency.
In a tweet, Ali cautioned that traders must be prepared for both bullish and bearish scenarios in the volatile crypto markets. He identified the $3,400 price point as a crucial support level for Ethereum’s native token, ETH.
“In trading, you must always be prepared for the best and the worst!” Ali wrote. “The most brutal scenario for Ethereum right now is breaching the $3,400 support level.”
If ETH were to break below $3,400, Ali believes it could confirm the formation of a bearish technical pattern known as a “bear pennant” on the daily chart. A bear pennant is a continuation pattern that signals a potential resumption of the prevailing downtrend.
Ominously, Ali warned that such a development “could trigger a major correction for ETH down to $2,800.” This would represent a roughly 17% decline from the current levels around $3,400.
It’s worth noting that technical analysis involves studying historical price movements and chart patterns to forecast future price action. However, it is not an exact science, and market conditions can change rapidly.
For those unfamiliar with trading terminology, a “support level” refers to a price point where many buyers are expected to enter the market, potentially halting or reversing a downward trend. Conversely, a “resistance level” is a price point where selling pressure may overcome buying pressure, hindering further upward movement.
As always, investors are advised to conduct their own research, manage risk appropriately, and never invest more than they can afford to lose in the highly volatile cryptocurrency markets.
