Why not dust off our Fibonacci retracements to see if we can find some support for previous suggestions that, in the midst of the fed-provided stability, MBS is wont to trade in a more technical pattern than normal. Here's a chart using the january highs and the february lows as our range.

It's a bit uncanny actually.  Notice firm support at 50% in mid January, followed by firm resistance overhead at 62%.  That was tested 5 days later, but could not confirm, and then sold off, finding resistance at 23%.  Then capped again at 50.  A violation and retest of the 23% line in late feb sent us to the lows.  We were capped on the upside at 38%, but broke through with the Fed announcement.  The most important part of these retracement levels is the recent support that the 4.0% coupon has found at 61% or 100-00.  We simply have not seemed to be able to close below that despite intraday violations in the last 3 days.  If today were to end today, it would be the 3rd day in a row.  This doesn't necessarily mean we won't fall below that level, but rather IF we do and that violation is confirmed in the next session, we're probably going lower.

Also of note is a new term for us: INTERNAL TRENDLINE.  This simply connects as many recent highs and lows as possible.  The yellow line gets a lot of "touches" and incidentally supports our 3 recent intraday lows AND it right about the mid point of the trend channel we've been tracking, adding significance to that general uptrend.  AGAIN!  Trend channels DO NOT mean trends will continue, but rather, that it is significant if they are violated and could indicate a momentum shift.

To get an idea of what has been happening on the day, here is the intraday chart of the 4.0 and the 10 yr tsy.  Currently we're up a tick at 100-06 on the 4.0.

Next post will discuss tsy auction results...  Which could change this chart entirely.  Stay closely tuned.