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Points of Interest (POI) and Fibonacci in Smart Money Trading

Author: Catalin Catalin
Updated on:

POI stands for Point of Interest. In trading, a POI is a price zone where large orders are likely to sit, so price often reacts there. The common POIs are fair value gaps, order blocks, breaker blocks and rejection blocks. Traders wait for price to reach one, then look for confirmation.

The idea comes from Smart Money Concepts and works the same way in crypto, forex and stocks. A POI is not a signal on its own: it marks where to pay attention, and the reaction at the zone decides the trade.

Common Types of POIs

1. Fair Value Gaps (FVG)

A fair value gap forms when price moves so fast that the wicks of the candles on either side of a large candle do not overlap. The gap shows an imbalance between buyers and sellers, and the market often returns to it to rebalance.

Fair Value Gap POI example showing price imbalance between candlesticks

Traders watch FVGs as possible pullback zones before the trend continues.

2. Order Blocks (OB)

Order blocks are the last opposite candle before an impulsive move, read as the area where large orders were placed. Price often revisits them, and they can act as support or resistance.

Order block POI example showing institutional support and resistance zones

  • Bullish order block: the last bearish candle before an impulsive bullish move. Price often returns to this zone, where buyers may step in.
  • Bearish order block: the last bullish candle before an impulsive bearish move. Price often revisits this area, where sellers may step in.

Order blocks that line up with liquidity zones and other confluence carry more weight. Our guide to bearish order blocks goes deeper.

3. Breaker Blocks (BB)

Breaker blocks are former support or resistance levels that flip after a strong move. A breaker signals that the liquidity at the old level has been absorbed.

  • Bullish breaker block: a resistance level that, once broken, turns into support.
  • Bearish breaker block: a support level that, once broken, turns into resistance.

Breaker block POI example showing former support and resistance flipping

4. Rejection Blocks (RB)

Rejection blocks appear when the market strongly rejects a price level and leaves long wicks behind as signs of a failed breakout. They often form near liquidity pools, where stop losses and pending orders get triggered.

Rejection block POI example showing wick rejection near a liquidity zone

Combined with a fair value gap or an order block, a rejection block adds confluence to a setup.

How to Find a Point of Interest in Trading

  1. Mark the swings. Find the swing highs and lows on one timeframe. Our guide on how to identify swing highs and lows covers the rules.
  2. Read the structure. Decide whether price is making higher highs and higher lows or lower highs and lower lows. See market structure in smart money trading.
  3. Find the leg that broke structure. The impulse that closed beyond the last swing is where smart money left its footprint.
  4. Locate the origin of that leg. The order block, fair value gap or breaker inside it is your candidate POI.
  5. Check its position. In an uptrend, a POI in the discount half of the range (below the 0.5 level) is more relevant for buys; in a downtrend, one in the premium half for sells.
  6. Wait for price to reach it. Set a price alert at the zone and decide on confirmation, not on the touch.

Why POIs Matter

  • Where large orders sit: POIs mark zones where institutions are thought to have executed, so price tends to react there.
  • Reversals and continuations: a reaction at a POI can mark a turning point or the end of a pullback within a trend.
  • Better planned trades: combined with Fibonacci levels, POIs give a defined zone for entries and stops instead of a single price.

Fibonacci Trading and Its Role in POIs

POI and Fibonacci confluence diagram showing OTE alignment with an order block
A POI becomes stronger when the same zone also lines up with a Fibonacci retracement area, such as the OTE band.

Fibonacci retracement measures how deep a price correction goes. When a Fibonacci level lines up with a POI, the zone has more than one reason to matter.

Fibonacci Retracement in Trading

The Fibonacci retracement tool is applied from:

  • Swing low to swing high (for uptrends)
  • Swing high to swing low (for downtrends)

Key Fibonacci levels:

  • 0.236 (23.6%): minor pullback level
  • 0.382 (38.2%): shallow retracement
  • 0.5 (50%): midpoint of the move (not a Fibonacci number, but widely used)
  • 0.618 (61.8%): the golden ratio, a common retracement level
  • 0.786 (78.6%): deep retracement, often tested before reversals

Premium and Discount Zones

  • Premium zone (above the 0.5 level): where SMC traders look for sells.
  • Discount zone (below the 0.5 level): where SMC traders look for buys.
  • Equilibrium (the 0.5 level): read as fair value within the range.

Optimal Trade Entry (OTE) with POIs

The Optimal Trade Entry (OTE) zone lies between the 0.618 and 0.79 retracement levels. When a POI sits inside the OTE zone, traders treat it as a stronger area to watch for a reaction.

Optimal Trade Entry zone from 0.618 to 0.79 Fibonacci retracement

How POIs and OTE Work Together

  • The POI marks the decision zone.
  • A retracement into the OTE zone within that POI strengthens the setup.
  • Large participants are thought to accumulate or distribute within this range before the next move.

Find more details in this webinar:

Steps for Using Fibonacci with POIs

  1. Identify market swings. Pinpoint the swing high and swing low of the move you are measuring.
  2. Map Fibonacci levels. Draw the retracement across that swing to see where price may stall before the trend continues.
  3. Find confluence with POIs. Look for a POI that overlaps a key level, for example a bullish order block around the 61.8% retracement.
  4. Confirm the entry. Wait for a reaction at the overlap, such as a rejection candle or a break of structure on a lower timeframe, before committing.

How to Apply POIs and Fibonacci in Uptrends and Downtrends

Uptrend (buying scenario)

  1. Identify a POI (order block, breaker, liquidity pool or FVG).
  2. Draw Fibonacci retracement from swing low to swing high.
  3. Look for the OTE zone (0.618 to 0.79) within the POI.
  4. Enter with confirmation, such as a bullish candlestick pattern or a Break of Structure (BOS).

Downtrend (selling scenario)

  1. Identify a POI.
  2. Draw Fibonacci retracement from swing high to swing low.
  3. Look for the OTE zone aligning with the POI.
  4. Enter with confirmation, such as bearish price action or a rejection at resistance.

Common Mistakes When Using POIs and Fibonacci

  • Expecting every level to hold. Not every retracement respects Fibonacci levels or POIs; price action has to confirm.
  • Ignoring market structure. A POI against the higher-timeframe trend is weaker than one with it.
  • Marking too many POIs. If every candle is a POI, none of them is. Keep the zones that caused a break of structure.
  • Using Fibonacci alone. Fibonacci is confluence, not the only reason to enter.

Conclusion

Points of Interest and Fibonacci retracement work best together: the POI says where large orders may sit, Fibonacci says how deep the pullback is, and confirmation at the zone says whether to act. None of it guarantees a reaction, so plan the stop before the entry.

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FAQ on Points of Interest

What does POI stand for in trading?

POI stands for Point of Interest. In Smart Money Concepts it means a price zone where large orders are likely to sit and price is likely to react, such as a fair value gap, order block, breaker block or rejection block.

Are POIs the same as support and resistance?

Not exactly. Support and resistance describe broad horizontal areas, while POIs are specific zones with a reason behind them, such as an imbalance, institutional order placement, a flip of support into resistance, or a strong rejection. A POI can overlap with support or resistance, but the value is understanding why that area may matter.

How do Fibonacci levels help when combined with POIs?

Fibonacci retracement measures how deep a pullback is within a swing, which frames where price may rebalance before continuing or reversing. When a key Fibonacci level aligns with a POI, the zone is supported by more than one reason, which helps with planning entries and risk.

What is OTE and why is it important in POI-based setups?

OTE, or Optimal Trade Entry, is the retracement zone between 0.618 and 0.79. It matters because reactions often occur there when it overlaps with a POI, especially in clean trends where large participants may accumulate or distribute during the pullback.

What confirmation should be used before trading a POI with Fibonacci?

A POI and Fibonacci alignment is only a hypothesis until price reacts. Traders typically look for a clear rejection, displacement away from the zone, or a break of structure that supports the idea. Without confirmation, the zone is an area to watch, not an automatic entry.

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