Today’s sharp decline in the Nifty saw the Index move below 5545. The 5545 level was an earlier swing low on shorter time frames. When the market breaks below a swing point (high or low), it is giving a message. When lows are broken, the charts begin a process of lower lows, and, eventually, lower highs. This is not bullish.
Therefore, once 5545 was taken out, all short term positions should be closed. Aggressive traders should take short positions.
What may have began is a correction of the up move. At this point, it is difficult to say the extent of the decline. Much easier is to identify the support levels – 5400.
Corrections are counter trend movements, therefore, they are difficult to trade. Short term traders should go with the flow, it is on the downside, but have modest expectations since these declines can be mixed with choppy movements.