nifty has taken support exactly on lower trendline of upward sloping channel which is also the 61.8% retracement level of rise from 2755. If the upward sloping channel breaks then technically the target is 2665 as indicated by the pink line. supports are shown on the chart.
Fibonacci supports for rise from 2661 to 2970 are shown on the chart
50% --- 2815
In conclusion shorts can continue positions with a stop loss of 2970 and those who are not short can initiate shorts on any rally .Only sustained trading above 2970 can lead to covering of shorts.Further weakness will be seen if trades below yesterday's low of 2839. Look for breakdown of 2718-2722 levels which would open up further shorts as it would be downward break of the equilateral triangle being formed since october 2008 lows.
Always be hedged as we are still within the broad range of 2500-3240 of last 3 months and when the market is ranging between levels you could get whipsawed.