Following a successful test flight, the Virgin Galactic Share price is back in favor. After more than doubling in 2 weeks, can the rally continue?
Last week, I discussed the upcoming test flight and its implications for Virgin Galactic stock (SPCE).
I asked: “Is the Virgin Galactic share price about to take off ?”
What seemed like an optimistic view turned out to be relatively conservative. The news that the rocket launch was successful sent the share price higher by +50% this week.
Yesterday’s closing price of $31.09 was +125% higher than the $15.91 low on the 11th of May. However, the stock is still way below its all-time high of $62.80.
Given the current positivity surrounding the share price, investors may once again be aiming for the stars.
The daily chart shows that SPCE had broken down through la long-term support line before last week’s recovery.
Once the price cleared the line at $17.90, the next target was a descending trend line at $19.68. This trend had been a good area of resistance since early March.
On Friday, the 21st of May (1 Day before the test flight), the share price closed at $21.07 and above the trend for the first time in two months.
The following Monday, The stock gapped higher on the opening and hasn’t looked back since.
The recent move has left the price looking a little stretched. However, given the momentum, it may well squeeze higher in the short term.
The price should find resistance at around $36.00. Previous rallies in December and March both reversed from this area.
I would expect to see support at $26.50. A breach of this level was the catalyst for the recent extension higher to $31.09
While the recent news is encouraging, the long-term outlook remains unclear. This makes investing at this valuation extremely risky. Therefore I recommend keeping the stock on watch and waiting for a clearer trading opportunity.
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