What is POI, the tool used by traders? An in-depth explanation

Do you often see certain areas on charts being repeatedly touched? Prices seem to be attracted like by a magnet, moving back and forth between these points? This is the effect of POI (Point of Interest).

Plain Language POI Definition

Simply put, a POI is a specific area on the chart where the price repeatedly interacts. Once traders identify these zones, they often wait for the price to return, hoping to catch rebounds or breakouts.

How do POIs form? Look for these signals:

• A single candle with a sharp rise or fall, accompanied by huge volume (indicating genuine liquidity)
• Long-wick candles (areas where the market was rejected)
• Price gaps (zones quickly skipped over by the market)
• Noticeable supply/demand imbalance zones
• Market makers’ or liquidity providers’ accumulation points

What Do Common POIs Look Like?

Breakout candles: Strong bullish or bearish candles with high volume, representing real liquidity entry points.

Rejection candles: Hammer, shooting star, or similar candles that get pushed back; support often lies below, resistance above.

Imbalance zones: Rapidly skipped-over blank areas on the chart, likely to be revisited later.

Supply/Demand zones: Areas with heavy order accumulation, where price tends to test repeatedly.

How to Profit from POIs

Step 1: Wait for the price to revisit

After identifying a POI, don’t rush in immediately. Wait for the price to approach this zone again. For example, if the price jumps from 1.95 to 2.00, then the 1.95-1.96 range becomes a POI. If the price falls back two hours later, it’s a good opportunity.

Step 2: Look for reversal signals

When the price nears the POI, watch for reversal candles (like hammer, engulfing patterns). Confirm signals before entering—don’t shoot prematurely.

Step 3: Set precise stop-loss

Place your stop-loss 10-15 points below the POI to keep risk manageable.

Step 4: Use indicators for confirmation

If the price is near the POI and RSI is above 70 (overbought), it’s a strong sell signal. Alternatively, confirm with volume—if rebound at the POI is accompanied by increased volume, that’s an extra confirmation.

Practical Example (Using XRP)

On a 15-minute chart, suddenly a large bullish candle appears, with the price jumping from 1.95 directly to 2.00 within a minute. This candle marks the POI.

Two hours later, the price drops back to the 1.95-1.96 zone. You notice a hammer candle (long lower wick), RSI has just fallen from 80 to 60, and volume has increased.

This is your entry signal: buy, with a stop-loss at around 1.9450, aiming for a retest of the previous high at 2.00.

Common Pitfalls (Avoid These)

• Entering without confirmation, resulting in fake breakouts triggering stop-losses.
• POI itself is valid, but ignoring the overall trend (trading against the trend at POI can lead to losses).
• POI is correct, but poor risk management causes big losses during downturns.
• Using a 1-hour chart to find POIs but trading on a 1-minute chart—timeframe mismatch.

Final Advice

Use POIs primarily on 15-minute or higher timeframes. Short-term oscillations are too volatile and prone to false signals. Also, combine POIs with market structure, moving averages, and volume—don’t rely on just one indicator.

Disclaimer: This article is for educational purposes only and does not constitute trading advice. Trade at your own risk.