Virgin Galactic's Stock Breaks Out: How Does The Chart Look?

Virgin Galactic Holdings, Inc. SPCE has caught renewed interest from investors since pulling off a successful test flight last month.

In June 2020, the company said it expected to receive its FAA license after one or two more test flights, and with its May flight now under its belt the license could come at any time, which would be bullish for the stock.

The stock is also gaining traction on Reddit due to its underlying statistics:

• High levels of ownership: Institutions and insiders own 55.56% of Virgin Galactic’s float, with insiders owning 29.61% and institutions owning 25.95%.
• High short interest: As of May 28, 45.92 million, or 29.62% of the stock’s total 154.46 million float, is held short. This is an increase from April 30 when 33.57 of Virgin Galactic’s shares were held short.

Shorts could soon be forced to cover, however, because on Thursday Virgin Galactic’s stock broke out of a bull flag pattern and looks set to head higher.

See Also: How to Buy Virgin Galactic Stock

The Virgin Galactic Chart: Virgin Galactic has been consolidating just under a resistance mark at $38.65 and on Thursday, bullish volume helped the stock make a break north. Prior to Thursday, Virgin Galactic consolidation has formed the second half of a bull flag pattern with the pole being set between May 24 and June 8 and the flag forming between June 9 and 16.

The bull flag pattern also set up just under a gap between $39.72 and $41.69. Gaps on charts fill 90% of the time and traders can expect Virgin Galactic’s stock to trade up into that price range in the future as it is only about 8% away and Virgin Galactic’s stock can move 5% or more per day. There is also a gap below, however, at the $21 to $23 level that may make bulls weary. That gap is around 39% away from the current stock price and less likely to fill in the near future.

Virgin Galactic is trading above both the eight-day exponential moving average (EMA) and the 21-day EMA, which is bullish. The eight-day EMA is also trending above the 21-day EMA which is another good sign for the bulls. This week’s consolidation has helped both EMAs to catch up to Virgin Galactic’s stock price and the eight-day EMA is now acting as a close support.

Bulls want to see Virgin Galactic’s stock continue to trade up above the bull flag pattern and for bullish volume to help the stock close over resistance near the $38 level. If it can make that level support, it can easily rise up and fill the overhead gap.

Bears want to see Virgin Galactic drop back down below the upper sloping trendline of the flag and to trade down until it loses support at $32.82. If it were to lose that area as support, it could fall toward $27.80.

SPCE Price Action: Virgin Galactic was trading down 2.5% to $36.39 at publication time.