Virgin Galactic Stock Lands At Support, Looks Set To Relaunch: A Technical Analysis

Jefferies launched coverage on Virgin Galactic Holdings, Inc SPCE with a Buy rating and a price target of $33. Analyst Greg Konrad forecasts the space tourism company to bring in revenues of $1.7 billion driven by additional space ships completing 660 flights per year by 2030.

Virgin Galactic’s stock reached a high of $57.51 on June 28 in anticipation of Sir Richard Branson’s successful July 11 flight to the edge of the space but has since sold about 57%. The sharp downtrend was propelled when the company announced a $500 million shelf offering of common stock the day following the historic flight and subsequently received a downgrade to Underperform with a price target of $25 from Morgan Stanley on Aug. 11.

See Also: 5 Stocks Retail Investors Have Eyes On Amid Richard Branson-Fueled Space Excitement

The Virgin Galactic Chart: Virgin Galactic gapped down about 2.5% and fell another 13% following the downgrade, which put the stock square at the $25 level. The stock has since traded in a tight sideways pattern in consolidation between the $23.99 and $27.04 level for the past 12 trading days.

The sideways action has taken place with relatively low volume on the daily chart, which demonstrates there are not a lot of buyers or sellers. Virgin Galactic tested a support level near the $24.70 level on six separate occasions and held above it, however, which indicates the bottom is in at least temporarily.

There are two gaps on Virgin Galactic’s chart: one below between $21.84 and $23.52 and a gap above at the $30 level. Because gaps fill about 90% of the time, it's likely Virgin Galactic’s stock will trade into each range at some point in the future.

On Tuesday morning Virgin Galactic’s stock regained support of the eight-day exponential moving average (EMA) but is still trading below the 21-day EMA with the eight-day EMA trending below the 21-day, which indicates short-term sentiment could be changing. If the stock can regain support of the 21-day EMA and trade above it for a number of days, the eight-day EMA will cross above the 21-day which would turn sentiment bullish.

Virgin Galactic is trading below the 200-day simple moving average which indicates overall sentiment in the stock is bearish.

• Bulls want to see big bullish volume come in and drive Virgin Galactic’s stock up over the 21-day EMA and for momentum to push it up above resistance at the $28.49 level. If the stock can regain the level as support, it has room to move up to fill the overhead gap.
• Bears want to see big bearish volume come in and drop the stock down below support at $24.70. If the stock loses the level, it's likely to fill the gap below.