GBP/JPY Forecast: Pound Slips Against Yen Slightly

• During Friday's trading session, the GBP/JPY saw a lot of volatility as it fluctuated back and forth.
• This currency pair is highly sensitive to global risk appetite, which has been fluctuating a lot recently.
• While there was an impressive shooting star from an impulsive move on Tuesday to break above the ¥165 level, the market has since shown signs of exhaustion and is likely to see a pullback. The question remains, however, whether this pullback will be significant.

The 200-Day EMA currently sits around the ¥162 level, with the 50-Day EMA set to rise above it, which could kick off a "golden cross." However, it's difficult to discern the market's direction now. It seems that the Japanese yen is a little oversold in the short term, so it does make sense that the yen would pick up some strength. Whether or not it can break down below the ¥161.50 level remains to be seen. If it does, it would be a negative turn of events, but if that area offers support, the pair could try to reach ¥165.

It's Only a Matter of Time Before Buyers Return

Due to the volatility of the market, it's important to exercise caution with position sizing to allow for potential volatile moves. As the weekend approaches, it's clear that the market is not yet ready to break out to the upside. While the author still favors the upside, they recognize that the market is not quite ready to move in that direction yet. With that in mind, it's best to proceed with caution. After all, this pair does tend to move rather rapidly with economic news and unforeseen circumstances.

Regardless, I do think that it’s probably only a matter of time before the buyers return, but you don’t want to jump in with the huge position right away, as this pair also can move 50 or 60 pips in the blink of an eye. Waiting to see whether your position works out before adding to it is probably the best way to play this market, but then again that’s something that I could say with most pairs, most of the time. If we can break above the ¥165 level, that would be an extraordinarily bullish move, and perhaps open ¥167.50. However, it’s going to take a Herculean effort to make that happen anytime soon.