A Dip, A Test and now a time to take decisions

When the Nifty first started its rally from 3800, I had made these points:
1. There is support at 3800, so swing traders / short term traders should buy with 3800 as stop.
2. Investors should stay away since this is a bear market rally.
3. Is a bottom coming in place ? The first sign of this will be when the Nifty corrects after its rally and the correction stops before touching 3800.
The third statement is now coming out to be valid. The Nifty went through a decent correction retracing 400 points from 4550 to 4150. The lows at 4150 have been above the previous 3800 bottom.
The Nifty has made a pattern of higher highs (confirmed) and higher lows(probably).
The question then is: Should Investors buy now ?
We have to give a clear, actionable answer to this question. Let us answer this question as traders – straightforward, and not as analysts (if this happens, maybe, on the other hand….).
Before an answer, here is a more significant question: How do you decide the amount you invest? if you are surprised at this question, let me tell you that this is much more important than a decision on buy or not. The correct term for deciding how much to invest is called ‘Position Sizing’ so we will use this term.
Position sizing is that part of your system that tells you “how much” throughout the course of the trade. The terms trade also refers to investments. Position Sizing, along with your personal psychology, controls about 90% of your performance in trading / investing. That’s how important it is!
It is possible that a rally in a bear market may be the start of a new bull move. When we have a possibility of such an event, investors should start testing the waters, by buying small lots of blue chips. If the rally fizzles out, they can (a) hold on to their positions, or, exit with small losses.
When the Market has started on what is a confirmed bull market, investors should increase their positions, commit more funds to equity.
Now, to our original question: Should Investors buy now ? Well, what do you think the answer is ? Yes, with careful position sizing. Use, say, 10% – ten percent of your available capital to buy blue chips – Reliance, Tata Steel, TCS, Maruti, HDFC Bank, Cipla, Grasim, Sterlite, ONGC, Cairn, —- the list is longer than this. (I own shares in some of these names). If the Nifty falls and closes below 4150 – the current low, then stop buying. You can either hold on to these shares, or, sell them for a small loss – your choice.
If the Nifty continues to rally, then wait for a new high above 4550. Once this level is broken, add more on dips.

In the short term, I assume this market remains in a trading range, with support at 3800, and resistance at 4550. A support has now been defined at 4150. if this level breaks, keeping long positions may not be a good idea.