How Virgin Galactic Can Rally to $20 on NASA Pact

Virgin Galactic is ripping higher Monday after a new agreement with NASA. Here's how the stock can continue to run higher, potentially to $20.
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Virgin Galactic  (SPCE)  is ripping higher on Monday. While shares are off the session highs, the stock most recently was up 13% on the day.

The move comes after the company inked a new deal with NASA. As covered on TheStreet, Virgin Galactic said it and NASA "agreed to a program to train astronauts, including private individuals, for journeys to the International Space Station.”

NASA is seeking more commercial use of the Space Station, which potentially plays into Virgin Galactic’s strengths. Keep in mind, SpaceX sent a pair of U.S. astronauts up to the International Space Station last month.

SpaceX, which was founded by Tesla’s  (TSLA) - Get Report Elon Musk, is the first private company to complete such a mission.

Additionally, Virgin Galactic announced a pact with NASA when it reported earnings in early May. At that time, the pact was for the two to develop high-speed technologies. In any regard, racking up partnerships and deals for Virgin Galactic is no doubt good news for the bulls.

Let’s look at the charts.

Trading Virgin Galactic Stock

Daily chart of Virgin Galactic stock.

Daily chart of Virgin Galactic stock.

Prior to Monday’s big gap-up action, Virgin Galactic stock was doing a great job holding up over its 200-day moving average. However, downtrend resistance (blue line) was squeezing shares lower over the last two months.

On the plus side, Virgin Galactic is now clearing downtrend resistance. On the down side, it’s still struggling with the 50-day moving average. That gives both bulls and bears an opportunity.

For bears, they’ll want to keep the stock below the 50-day moving average, putting a dip back down to $15 in the realm of possibilities. For bulls, they’ll want to see shares hold the 50-day moving average.

If it can do so, they’ll then need Virgin Galactic stock to then take out the session high at $17.70. Above that and bulls will have their focus on $20, a notable level over the past six months.

To clear that mark will be difficult. If the stock can though, it puts the 38.2% retracement near $21.80 in play, followed by the 50% retracement just below $26. As always, let’s go one level at a time before getting too far ahead of ourselves. At the moment, bulls are in control.