This is a trade on a stock, MDGL, that I had prepared but failed to trade. I analyzed in detail why I missed it and how I will prevent missing this next time.

1. D2 Catalyst Continuation
Catalyst: Liver disease drug succeeds in phase 3.
Setup: D2 Continuation – Changing Fundamentals
Trade: First consolidation & EOD Trend
Ticker: MDGL
Date: 20-12-22

2. Bigger picture: SPY weakness, Market shifting
Last Thursday we broke the
consolidation low. We then
closed red 5days in a row
making lower lows on high
volume. Today was a bounce
day where we broke
yesterdays LOD but
reclaimed.
Market breadth is slowly
shifting from neutral to
negative breadth. The overall
market is becoming more
bearish after long period with
strong breadth

3. Bigger picture: MDLG weekly chart
A gap of +215% meant a new four year high.

4. Intraday
Fundamentals
Float: 13,56 million.
Institutional Ownership: 78,4%
Short %: 16%.
ATR: 17,64.
Average Daily volume (50 day): 0,328 million
Gap: -1,3%.
Catalyst:
Madrigal Pharmaceuticals, Inc. is engaged in developing small-
molecule drugs addressing cardiovascular and metabolic diseases.
Its products pipeline include MGL-3196, an orally administered
liver-directed thyroid hormone receptor-agonist that is used for the
treatment of NASH, dyslipidemia/hypercholesterolemia and high
triglycerides; and MGL-3745, a thyroid hormone receptor-agonist
which are in pre-clinical trial stage. Madrigal Pharmaceuticals Inc.,
formerly known as Synta Pharmaceuticals Corp., is based in Fort
Washington, Pennsylvania.

5. Catalyst
•In MAESTRO-NASH, a 52-week serial liver biopsy Phase 3
study in more than 950 patients, resmetirom achieved
both primary endpoints and potentially clinically
meaningful effects with both daily oral doses, 80 mg and
100 mg, relative to placebo
• NASH resolution (ballooning of 0, inflammation
of 0-1) and ≥2-point NAS reduction with no
worsening of fibrosis (p<0.0001 at both doses)
• Fibrosis improvement by at least one stage with
no worsening of NAS (p=0.0002 and <0.0001 at
80 and 100 mg, respectively)
•Potentially clinically meaningful LDL-lowering, a key
secondary endpoint (p<0.0001)
•Multiple positive effects on NASH biomarkers and
imaging
•Resmetirom was safe and well-tolerated in the
MAESTRO-NASH study, consistent with the overall safety
in Phase 3 MAESTRO trials, expanding the large safety
database
•Madrigal intends to file a new drug application seeking
accelerated approval of resmetirom for the treatment of
non-cirrhotic NASH with liver fibrosis

6. D2 Catalyst
continuation
Trend day –
Trade Strategy
Stock selection
-Stock in play with a significant (technical) catalyst, earnings report or strong theme.
-Elevated RVOL above 3.
-Strong move from the open (0.75ATR move) OR exceptionally strong volume during open.
Trade2hold factors
- Holding above significant support level: HOD1 8/10 importance level.
-Strong market, holding the lows in an uptrend.
-Strong catalyst: changing fundamentals.
- Elevated RVOL
- Solid wedge/consolidation pattern
- Room to trend on the daily.
- Strong open through resistance (8/10), but not extended (+0.75 ATR) = Room to trend intraday.
Taking out support resistance levels on a D2 setup indicates the potential of a trend day.
Overall thought process – D2 continuation
When price opens near HOD1, and price trades above HOD1 for significant time I expect a continuation to
the upside if we’re not extended. HOD1 is the inflection area/price; above this level I am long biased. If it
fails at this level AFTER the open his is a failed continuation. During the open everything can happen, this is a
period of price discovery.
Morning continuation – First consolidation setup.
A stock has made a strong drive outside its ranges and is now trending. The stock goes through a period of
consolidation and accumulation. With a new level to risk against – more traders jump in, and the big money
must continue to chase higher. This consolidation, the first in the trend, usually lasts 20-30 minutes.

7. – Trend day-
Trade Strategy
Trend day
A stock with a good catalyst doesn’t always have to trend on D1.
When on D2 we immediately take out important resistance and we don’t even retest that level but
consolidate higher. The optimal trade strategy considering all the other factors is trade2hold, but that
doesn’t mean I shouldn’t take profit into move2move trades.
We can have a strong move, then fail to midday but start trending again end of day.
Trend day variables/confirmation
-Shallow and consistent volume through out the day.
-Higher highs and higher lows
-5m trends above 20 EMA, 10m trends above 9EMA.
-Expect to close near HOD.
D2 continuation EOD Trend Day.
Price has failed to maintain it’s trend intraday. We have already made a strong push and are not very likely to
make a new HOD. But that doesn’t mean we can’t have a strong close. The last two hours of the day a ticker
is still able to trend. On D2 we have an inflection point that can be used as support and start area where the
trend picks up. This point can also be VWAP or just a simple reclaim of the 5m 20EMA.

8. First consolidation – Trade Management
Trade2hold - Flat
Significant 5m close below 20
EMA:
1) close on above average
selling volume;
2) a new 5m low that occurs
after close;
Trade2hold – Exit strategy
Profit taking into
-ATR moves: 1.25ATR, 1.5ATR etc.
-Psychological numbers.
First Consolidation – Entry
Entry: As close to the bottom of
the consolidation as possible.
Risk: Below consolidation/false
break down candle.
EOD Trend day
Entry: once 5m reclaims the 20
EMA with a higher low.
OR after EOD trend is confirmed
on the first higher low.
Risk: Below higher low.
.

9. Technical Analysis: Day 1 levels.
Gameplan
“I don’t have any strong higher time frame levels. 220 has
some potential but the question is how solid 4y old levels
will be, 7/10 significance because it got respected intraday.
234-236.50 area is where the morning high was, and where
we managed to close. Therefore, I would rate this area
8.5/10 significance for today, since we’re opening around
this level, this is the level we need to hold above for
sustained moves to the upside.
238.90 is premarket high area, 7,5/10.”
Notes in hindsight.
-Got the premarket high level wrong. Premarket is also not
doing significant volume to have significant levels. Intraday
prices may form levels around the premarket high and then
become significant.
-Missed a significant support level at 228. Held above this
level in morning and then failed hard. Tested it around 3PM
and then consolidated above it on significant volume.
8/10
- 236,50 is the inflection point. This is a level where it holds
above, I would be bullish but when it can’t hold I would be
bearish.

10. Intraday change of thesis.
FROM:
1) Elevated volume:
50% of average daily
volume within the
first 15m.
2) Strong D1.
3) Strong
fundamental catalyst.
4)Price action failed
to hold inflection
area. No strong price
action.
5) Holding below
inflection area.
TO:
4) Strong push on elevated volume: 0.8ATR move from
LOD. Not extended.
5) Holding above inflection area for sufficient period
(+15m). Holding above intraday key level 238 for 10m.

11. D2 continuation
First consolidation
above inflection
area.
Opening range formed.
Reclaim of VWAP and
inflection area.
Low volume in consolidation.
Trading above inflection area for
more then 10m.
Intraday key level to risk off.

12. First consolidation – Morning continuation
Optimal exit locations:
1)Measured move 1.25ATR
= 249.05.
2) steep 1m candle
(extension) & also into
Measured move 1.5ATR
(254)
3)250 psychological level.

13. Why did I miss this trade and how do I fix it?
• Undervalued the volume. Put more value on absolute volume, which
was low, then on RVOL (relative volume) which strong. This was the
main reason. Rare mistake of mine.
• Not using the checklist for my thesis. Power of checklists are
underestimated. Using this gives me clarity and more conviction.
• Not being prepared enough for a change of character intraday. I
incorporate this in my gameplan: Be prepared to change
expectations. When will my bias shift? What do I need to see?
• Not having enough confidence in the setup yet.
1)I need more repetitions, doing more playbooks help.
2)I will also do a market structure exercise drill each morning. This is
a form of deliberate practice where I analyze the chart at a current
point intraday (A), project the most likely paths forward (B), identify
potential trade opportunities/decisions (C) and step forward in time
and asses my decisions and expectations. Need to do this for the
most important moments. It’s like a bar for bar exercise.
3) Watch tape recording of important moments.
4) Of course, statistical edge is also important. I have some but I
always should be looking to find more & better edges. Will
specifically start tracking some data on 2nd day plays.

14. D2 continuation - EOD (End of Day) Trend.
Potential trend ended at
12:35, when a new low
occurred after a close
below the 20 EMA. Then
we had a sharp sell off on
low volume.
D2 EOD trend variables
-Shallow volume all day.
-Bounced of inflection
point.
-Reclaimed VWAP & and
5m 20EMA.
-Makes a higher low &
closes near HOD.