Hedge Pressure tracks cumulative dealer delta — the net direction of dealer hedging activity during the trading session.
Dealers continuously buy and sell the underlying to stay delta-neutral. Hedge Pressure aggregates this directional hedging flow into a single cumulative signal. A rising line means dealers are net buyers of the underlying (bullish hedging pressure). A falling line means dealers are net sellers (bearish pressure).
Hedge Pressure is a flow signal, not a level signal. Direction matters more than absolute value. A rising Hedge Pressure while price is flat is a leading indicator of potential upside. Divergence between price and Hedge Pressure often precedes reversals.
When Hedge Pressure is rising and the market is in positive GEX territory (stabilizing), upside momentum is constrained by dealer selling. When Hedge Pressure is rising and GEX is negative, dealers are fueling upside momentum — a more powerful setup.