European markets- further correction ahead?

The main European stock markets (FTSE, DAX & CAC) broke below their respective 20-day SMA yesterday. This could be prompted by a sharp drop in Euro of 1.6% overnight (see Chart 1 below). Euro looks vulnerable to looming contagion effect from the developing currency crisis in Latvia.


Chart 1: Euro index's daily chart as at 15/6/2009 (Source: Stockcharts.com)

FTSE, DAX & CAC may attempt to claw back above their respective 20-day SMA today. A failure to do so could signal the start of the much-anticipated consolidation for these markets for the days & weeks ahead.


Chart 2: FTSE's daily chart as at 15/6/2009 (Source: Stockcharts.com)


Chart 3: DAX's daily chart as at 15/6/2009 (Source: Stockcharts.com)


Chart 4: CAC's daily chart as at 15/6/2009 (Source: Stockcharts.com)