Lock Decision Framework — Ask These 4 Questions
1
How far are MBS from lender's opening price?
LOCK ≥ 12bp below lender's pricing time → reprice risk is real
WATCH 6–11bp below → monitor closely, don't leave unattended
FLOAT Within 5bp → minimal risk, technicals can guide decision
WATCH 6–11bp below → monitor closely, don't leave unattended
FLOAT Within 5bp → minimal risk, technicals can guide decision
2
What are the technicals showing?
Is price at a support level with a reversal signal (bullish hammer, engulfing) — or is it breaking down with no bottom signal? See candlestick and signal sections below.
3
How many signals are in confluence?
FLOAT Bullish candle + oversold stochastic + Fibonacci support = high-probability bounce
LOCK Bearish candle + below 200-day MA + at resistance = continuation likely
LOCK Bearish candle + below 200-day MA + at resistance = continuation likely
4
What's the macro backdrop?
LOCK Major data release imminent (NFP, CPI) with no clear signal yet
FLOAT Reports are behind us, favorable reversal at support, soft data tone
LOCK No identifiable bottom signal + continued downtrend = don't wait
FLOAT Reports are behind us, favorable reversal at support, soft data tone
LOCK No identifiable bottom signal + continued downtrend = don't wait
12bp
below lender's opening price = reprice risk
Track MBS price vs. the time your lender issued pricing — not the day's open.
Day change can be misleading if lender priced mid-morning and MBS have moved since then.
Threshold varies by lender (~10–15bp). Know your lender's typical trigger.
Day change can be misleading if lender priced mid-morning and MBS have moved since then.
Threshold varies by lender (~10–15bp). Know your lender's typical trigger.
Which MBS Coupon to Monitor
| Current Mortgage Rate Range | Watch This UMBS Coupon |
|---|---|
| 5.00% – 5.75% | UMBS 4.0% – 4.5% |
| 5.75% – 6.25% | UMBS 4.5% – 5.0% |
| 6.25% – 6.75% | UMBS 5.0% – 5.5% |
| 6.75% – 7.25% | UMBS 5.5% – 6.0% |
| 7.25% – 8.00% | UMBS 6.0% – 6.5% |
Rule: MBS coupon ≈ mortgage rate − 1.0% to 1.5% · If Fed is active MBS buyer, check newyorkfed.org and follow their target coupon
Western Technical Signals
BULL
Golden Cross
50-day MA crosses above 200-day MA → strong, sustained uptrend. Prices up = rates falling. Often marks a long-term sea change. Float-friendly environment.
BEAR
Death Cross
50-day MA crosses below 200-day MA → sustained downtrend. Prices falling = rates rising. Strong signal to lock; expect continued deterioration.
BULL
Support Level Hold
Price bounces at a proven floor — buying demand reasserting. The more times a level has held, the stronger it is. Watch for bullish candle confirmation before floating.
BEAR
Resistance Rejection / Double Top
Price fails at a ceiling twice → sellers accumulated; strong resistance established. Broken support also flips to future resistance (Rule of Polarity).
INFO
Gaps / Windows
Gap higher (open above prior close) = bullish premarket news. Gap lower = bearish. Top of a Falling Window becomes resistance; bottom of a Rising Window becomes support.
INFO
Moving Averages (25 / 50 / 100 / 200-day)
Price above MA = bullish. Below MA = bearish. Longer MA = stronger signal. 200-day breaks tend to hold for extended periods.
INFO
Leash Effect (25-day MA)
When price strays far from the 25-day MA, it tends to snap back — like a dog on a leash. Extreme extension = reversal warning in either direction.
INFO
Fibonacci Retracements
Key levels: 23.6%, 38.2%, 50%, 61.8%, 76.4%. Price often stalls or reverses here. Use the most recent meaningful high/low as your anchor. Back-test to confirm validity.
INFO
Slow Stochastic
%K ≥ 80 = overbought · %K ≤ 20 = oversold.
Float signal: %K crosses above %D from oversold zone.
Lock signal: %K crosses below %D from overbought zone.
Slow Stochastic (smoothed) gives fewer false signals than Fast.
Float signal: %K crosses above %D from oversold zone.
Lock signal: %K crosses below %D from overbought zone.
Slow Stochastic (smoothed) gives fewer false signals than Fast.
⚡ Confluence = Confidence
📍A candle signal AT a Fibonacci level or moving average is far more powerful than either signal alone.
🔒Lock: Bearish candle + below 200-day MA + at resistance + overbought stochastic
🟢Float: Bullish candle + oversold stochastic + at Fibonacci support level
⚠️One signal alone = proceed with caution. Three aligned signals = act with confidence. Can't unlock a loan.
Candlestick Patterns — Quick Reference
MBS context: In MBS/bond charts, bullish patterns = prices rising = rates falling (float opportunity). Bearish patterns = prices falling = rates rising (lock signal). Always confirm with context — a bullish candle in a downtrend without additional confluence is not enough on its own.
Bullish Engulfing
↑ BULLISH REVERSAL
After downtrend. Large green body engulfs the prior red body.
Bearish Engulfing
↓ BEARISH REVERSAL
After uptrend. Large red body engulfs the prior green body.
Hammer
↑ BOTTOM REVERSAL
After downtrend. Long lower wick (≥2× body). Bulls rejected the lows.
Hanging Man
↓ TOP REVERSAL
After uptrend. Same shape as hammer. Bears first attempt at control.
Inverted Hammer
↑ BOTTOM PROBE
After downtrend. Long upper wick. Bulls probing upside from lows.
Shooting Star
↓ TOP REVERSAL
After uptrend. Long upper wick. Bears took over intraday.
Doji
⚡ INDECISION
Open ≈ close. Neither bulls nor bears in control. Direction on next candle.
Morning Star
↑ BULLISH REVERSAL
3-day: long red → small body → long green. Sellers exhausting.
Evening Star
↓ BEARISH REVERSAL
3-day: long green → small body → long red. Buyers fading.
Key Economic Reports — Rate Impact