Stock picks of the day: 10,900 levels on Nifty may be an important trigger for bulls

During the past couple of sessions, the Nifty has managed to stage a smart bounceback from its crucial support placed at 10,740 levels.

The above level is the 78.6 percent Fibonacci retracement of the relief rally that started from 10,637 to 11,141.

From here on, if the Nifty holds above 10,740, it could possibly make an inverse head and shoulder pattern on the daily chart. But, that's too early to predict.

On the upside, a sustainable move above 10,900 could propel the index back towards the high of 11,141, but for a much stronger base confirmation the index needs to clear 11,200.

On the contrary, a breach of 10,740 might put the low of 10,637 under threat and can bring the index down towards 10,550 levels.

On the derivatives front, the long-short ratio in index futures by FIIs have reached 20 percent. Generally, such a low ratio results in heavy short covering. If we compare it with the technicals, then 10,900 could be an important trigger for bulls.