Japan's Nikkei index has taken a rollercoaster ride so far this week, and some analysts believe traders should strap in for more turbulence.
"It's very difficult market to trade. You're trying to predict intraday moves instead of monthly moves," Ben Collett, head of Asian equities at Sunrise Brokers, said.
The index surged 4.0 percent on Monday, before dropping 2.0 percent Tuesday and recovering 2.6 percent Wednesday, moves which followed last week's 5.0 percent cumulative drop amid the global market rout. On Thursday, the Nikkei was down around 0.7 percent mid-session as markets around the region traded lower.
"A lot of traders taken out by moves down are trying to hedge," by buying downside insurance, which tends to spur a market bounce, Collett said. "You still have people trying to buy on the dip and the short-term traders realize they're long-and-wrong and get out."
But while the Nikkei has recovered, Collett expects more volatility.
"Nobody seems willing to chase this [bounce]," he said, adding that while some are using the declines as an opportunity to bargain-hunt good fundamental stories, "everyone is waiting [for a bounce] to sell." Collett expects the Nikkei may rise another 150 points, but then he would consider shorting it, with the view that the index could eventually retest its year-to-date lows of around 13,900.