A crypto strategist is issuing a warning on Ethereum, saying that ETH is now in the midst of a major correction.

Pseudonymous analyst Ali Martinez tells his 56,500 followers on the social media platform X that Ethereum is now bearish after breaking below support at $3,400.

The trader shares a chart suggesting that ETH may witness an over 14% decline from current levels after confirming a bear pennant breakdown.

“The most brutal scenario for Ethereum right now is breaching the $3,400 support level. Such a move could confirm a bear pennant formation on the daily chart, potentially triggering a major correction for ETH down to $2,800.” 

Source: Ali Martinez/X

A bear pennant is a technical pattern indicating the continuation of downward price action.

Looking at on-chain data, Martinez says that the $2,850 level may offer support for Ethereum as it is the price area where 1.99 million addresses collectively bought a total of 1.64 million ETH.

“Ethereum dropping below $3,460 is a problem for the bulls! Given the lack of support, it increases the chances for a further ETH correction toward $2,850 or lower.” 

Source: Ali Martinez/X

At time of writing, Ethereum is trading for $3,284, down over 6% in the last 24 hours.

Looking at Bitcoin (BTC), the trader says that the crypto king will likely see more downside moves if it starts trading below the 200 exponential moving average (EMA) on the four-hour chart.

“The 200 EMA on the Bitcoin four-hour chart has been formidable support. Since early February, it has prevented BTC from dropping further.

For this reason, I’m paying close attention to this level because if it holds, it guarantees a rebound, but if it breaks as it did in mid-January, it could lead to more losses for BTC.” 

Source: Ali Martinez/X

At time of writing, Bitcoin is trading for $65,592 while the 200 EMA on the four-hour chart is hovering at $65,549.

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