POI is an abbreviation for Point of Interest, which means 'Point of Interest' — it is a specific area on the chart where the trader expects a strong price interaction (such as a rebound, break, liquidity entry...).
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First: What exactly is meant by POI?
This is an area on the chart determined by a previous abnormal price movement, such as:
• A huge candle with a long wick.
• A price gap.
• A false break (fakeout).
• A strong supply/demand area.
• Market Maker's entry point.
POI is considered a magnet for price, often the price returns to visit it either for a rebound or a break.
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Second: The most common types of POI
• 1. Breakout Candles:
• When you see a strong bullish or bearish candle with huge trading volume, this is considered a POI because there is real liquidity entry.
• 2. Rejection Candles:
• A candle with a long tail and clear price rejection (such as hammer or shooting star candles).
• 3. Areas with liquidity gaps (Imbalance):
• Price areas where there has not been much interaction, and often they tend to close.
• 4. Supply/Demand area:
• Areas where buy or sell orders have accumulated densely.
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Third: How can I benefit from it?
1. Identifying ideal entry areas:
• Wait for the price to return and visit the POI.
• Watch for reversal signals (such as reversal candles or breaking a price structure).
2. Setting an accurate stop loss:
• The stop loss should be set 10-15 pips below/above the POI.
3. Integrating it with indicators:
• If the price is close to the POI and the RSI is at 70 (overbought), this is a strong selling opportunity.
4. Precisely targeting goals:
• When entering a trade from the POI, you can set your targets at the next resistance or previous highs/lows.
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Fourth: Practical example (XRP currency)
Assume you are on a 15-minute timeframe, and a huge bullish candle appeared that pushed the price from $1.9500 to $2.0000 in one minute.
• This indicates the presence of a POI at the area $1.9500 - $1.9600, which is a clear launch point for the price.
• When the price returns later to this area (for example, after two hours), it can be considered a potential monitoring area for price interaction.
• If a reversal candle like Hammer appears at $1.9550, this may signal traders' interest in this area and a potential rebound.
• In such a scenario, the technical analyst can expect an attempt for the price to rise again towards the previous peak at $2.0000, while considering the risks of volatility below the area, such as $1.9450.
Note: The example is for educational clarification only and is not considered a trading recommendation.
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Fifth: Integrating POI with other analytical tools
• Market Structure: Determine if the trend is bullish or bearish, and let the POI serve you not oppose the trend.
• EMA 50/200: If the POI is above the moving average, it is support, and vice versa.
• Volume: A rebound from the POI with large trading volume = additional confirmation.
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Sixth: Common mistakes
• Entering before confirmation appears.
• Ignore the overall market trend.
• Relying on POI without risk management.
• Using POI on an unsuitable timeframe (preferably 15m for scalping).
