If Nifty sustains above 3120 level, it has possibility of testing 3350-3400 level in one or two trading sessions. If Nifty moves in expected lines, then we could see sharp rally in many frontline counters. Buying Call options could fetch good profits. Futures positions can be hedged using options as the swing is going to be wide in any case.
If the region 3120 is violated in the downside, we could see a range bound trade or a sharp decline towards 2900 level. An early indication of weakness comes if Nifty trades below 3050.
It seems that the overall trend in the Nifty continues to be bullish. Nifty has retraced around 25 percent from the high in percentage terms. Any percentage of retracement with in one third ( 33% ) retracement level is acceptable for a bull market correction.