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How to Trade Virgin Galactic as Shares Launch Higher on New Flight

Virgin Galactic rips higher on Thursday on news of a new scheduled flight but has given up some of its gains. Here's what to watch on the chart.

Shares of Virgin Galactic  (SPCE) - Get Virgin Galactic Holdings, Inc. Report were climbing on Thursday, up 12% on the day. 

The stock was cleared for liftoff in premarket trading, when it caught a boost of more than 25% on reports it has scheduled its next flight.

It has not been an easy time for Virgin Galactic shareholders as growth stocks are caught up in a painful bear market.

Many high-quality holdings have sold off by more than 40%, while some of the more speculative stocks - like Virgin Galactic - have seen far larger declines. 

From its 2021 highs, Virgin Galactic shares were down 72.5% before Thursday’s open.

The Ark Innovation ETF  (ARKK) - Get ARK Innovation ETF Report has been the bellwether for the group. With big swoons in its top holdings, like Tesla  (TSLA) - Get Tesla Inc. Report and Teladoc  (TDOC) - Get Teladoc Health Inc. Report, it’s led to big swoons in the high-growth group - and for Virgin Galactic specifically

While Virgin Galactic doesn’t hold a prominent position in the ARKK fund, it was a top-20 holding when the firm launched its Ark Space Exploration & Innovation ETF  (ARKX) - Get ARK Space Exploration & Innovation ETF Report a few months ago.

Regardless, is Thursday’s action enough to get Virgin Galactic back on the launch pad?

Trading Virgin Galactic

Daily chart of Virgin Galactic stock.

Daily chart of Virgin Galactic stock.

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Virgin Galactic had a nice pop at the open, but not surprisingly the stock is dipping from the session highs.

On the plus side, it’s back above the 10-day moving average. On the downside, it’s being rejected by the 21-day moving average.

Unfortunately with these stocks in a downtrend rather than an uptrend, this “two steps forward, one step back” type of price action is common.

In any regard, the roadmap is pretty clear when looking at the daily chart.

From current levels, bulls would love to see Virgin Galactic find its footing by the end of this week and reclaim the 21-day moving average and the $20 level. Back above these marks puts Thursday’s high on the table, at $21.63.

If we get a push above that mark, it puts $24 in play. This level came into play near the March low, but it was resistance during the stock’s late-April rally.

Above that mark brings a cluster of key moving averages into play, as well as a gap-fill near $26.40. At the present moment, it’s hard to imagine shares pushing through this area without some type of pause or pullback.

The downside is a bit more tedious. Currently below the 21-day moving average and investors have to worry about a test of the 10-day and even a gap-fill at $17.27.

If the stock does fill the gap and give up Thursday’s gains, the May low at $14.27 remains vulnerable.