Delta Hedging Pressure

Delta Hedging Pressure – Cumulative Volume Delta Proxy

This open-source indicator calculates and displays a simple proxy for **net hedging / directional pressure** using volume-weighted candle direction (often called cumulative delta or cumulative volume delta in order-flow analysis).

Core Concept
In many markets (especially futures, forex, crypto, indices), large players (institutions, market makers, hedgers) tend to accumulate directional exposure over time. When aggressive buying or selling occurs, it often shows up as sustained volume in one direction.

This script approximates that pressure by:
- Assigning +volume to bullish candles (close > open)
- Assigning –volume to bearish candles (close < open)
- Neutral (0) for doji-type bars
- Cumulatively summing this "delta" over a user-defined lookback or since the start of each trading day

The result is a running total line that drifts up during net buying pressure (potential bullish bias / short covering / hedging demand) and down during net selling pressure (potential bearish bias / long liquidation / hedging supply).

Why this is useful
- Acts as a **sentiment / bias filter** — helps traders see whether underlying participation supports the current price move.
- Session reset option (default: true) makes it particularly effective on intraday charts (1m–1h), where daily resets align with institutional session flows (e.g., Asian, London, NY).
- Background coloring (green/red/gray) provides instant visual context for current net pressure without cluttering the price chart.
- Zero-line crossovers and divergence from price can highlight exhaustion or absorption points.

Calculation Details
1. Per-bar delta = volume × direction
direction = +1 (green candle), –1 (red candle), 0 (doji)
2. Cumulative sum (cumHedge):
- Resets to current bar's delta on new day if "Reset on New Day" is enabled
- Otherwise runs continuously across all history
3. Sentiment label (last bar only):
- Bullish if cumHedge > 0
- Bearish if cumHedge < 0
- Neutral if exactly 0

Key Features
- Cumulative Hedge Pressure line (blue) — main plot
- Zero line (gray) — reference for net buying vs selling
- Optional background coloring (green = bullish bias, red = bearish, gray = neutral)
- Last-bar label showing current "Hedge Bias" (Bullish / Bearish / Neutral)

How to Use
- Best on lower timeframes (1m–15m) for intraday bias or higher (1h–4h) for swing context.
- Keep "Reset on New Day" enabled for daily institutional reset alignment (most common use case).
- Interpretation examples:
→ Rising cumulative delta + rising price = strong bullish participation (healthy uptrend)
→ Falling cumulative delta + rising price = bearish divergence (possible distribution / weak rally)
→ Cumulative delta near zero = balanced / choppy market
→ Strong divergence near extremes often precedes reversals or absorption
- Combine with price action, support/resistance, or volume profile — never use in isolation.
- Toggle background off if it distracts from price reading.

Inputs
- Cumulative Length: controls smoothing / memory when reset is disabled (default 50)
- Reset on New Day: true = daily reset (recommended for intraday), false = continuous
- Show Background Bias: toggle green/red/gray session coloring

Publishing Recommendation
- Apply to a clean chart (no other indicators needed for basic use).
- Recommended symbols: futures (ES, NQ, GC), forex majors, BTC/USD, XAUUSD — any instrument with reliable volume data.
- Use default settings for initial testing.

This is a lightweight, educational tool built for transparency — fully open-source. It is not a standalone signal generator and does not predict price direction with certainty. Trading involves significant risk.

Feedback welcome — happy charting!