The pink segments on the chart shows expectations of market weakness. This can be used as an opportunity to take a SHORT position instead of sitting on the sidelines. A short position allows Traders to benefit from a potential fall in price.
For Traders/Investors who may have a long standing BUY position in the market, the active hedging signal provides the opportunity to protect their position by partially or fully hedging their exposure depending on their goals.
In both cases, we need to be able to adjust the position given the risks of the active hedge moving against us.
For example, today (19th Dec), I have cut my hedged position by half as the active hedging signal has weakened.
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