Virgin Galactic's Engine Ignites: Why It's Soaring

Virgin Galactic Holdings, Inc. SPCE soared on Wednesday and filled its overhead gap. The flight north has been fueled by continued interest from the WallStreetBets community due to its strange level of institutional and insider ownership and large short interest.

There have also been rumors Virgin Galactic’s founder, Sir Richard Branson, plans to beat Jeff Bezos to space as soon as July 4. The company is awaiting its impending FAA license.

The stock reversed after finding a bottom of $14.27 on May 11 and has maintained a steady uptrend.

See Also: How to Buy Virgin Galactic Stock

The Virgin Galactic Chart: On Tuesday, Virgin Galactic’s stock printed a bullish engulfing candlestick, which indicated a move higher was imminent; on Wednesday, bullish momentum allowed the stock to fill its overhead gap and rise up to $41.65. The stock slammed into resistance at the level and began to consolidate within the gap on lower timeframes.

Between May 24 and June 21, Virgin Galactic created a bull flag pattern and broke up from it on Tuesday. Because the bull flag was created on the daily chart, which is a larger time frame, the breakout can be larger. Because Virgin Galactic advanced 15 points on its first move in the bull flag, the measured move of the break out from the bull flag gives a $48.97 target.

Virgin Galactic is unlikely to make a straight moon shot toward the $49 level and should be expected to consolidate along the way. The stock is already trading about 10% above the eight-day exponential moving average (EMA) and about 22% above the 21-day EMA, which is bullish, but consolidation would help the EMAs to catch up. Virgin Galactic’s stock is also trading about 45% above the 200-day simple moving average, which indicates overall sentiment in the stock is bullish.

Bulls want to see Virgin Galactic’s stock pop up over the top of the gap and bullish continuation. If bullish volume in the stock is sustained, it could then make a move up toward the $45 level before meeting further resistance.

Bears want to see Virgin Galactic’s stock continue to reject the top of the gap and for bearish volume to come in and pressure it back down toward a support level at $38.65. If the stock was unable to hold that level of support it could revisit the $35.73

SPCE Price Action: Virgin Galactic was trading up 2.4% to $40.37 at publication time.