Colour that's receding in sheepdog I'd nicknamed (6)
I believe the answer is:
indigo
'colour' is the definition.
(indigo is a kind of colour)
'receding in sheepdog i'd nicknamed' is the wordplay.
'receding' is a reversal indicator.
'in' indicates a hidden word.
'ogidni' is hidden in the letters of 'sheepdog id nicknamed'.
'ogidni' backwards is 'INDIGO'.
'that's' is the link.
(Other definitions for indigo that I've seen before include "Colour - I'd go in (anag)" , "type of dye" , "Blue-purple colour in spectrum" , "Tropical plant" , "Violet-blue dye" .)