SMC POI
Since there are no specific "points “in trading, POl stands for a zone of interest. A POI is a Price Level
where we can expect the market to give a reaction from, an area where we can expect a setup to form
and can also be where we can potentially execute a trade. If you've chosen a trading system based on
the smart money concept, you need to be aware and understand the presence of several areas that are
your interest zone. For us, the interest zone is such where we decide to buy or sell.
POI RULE SET
A High Probability POI must be selected from the Higher Timeframes (>15mn)
High Probability POI must have liquidity resting above it (when you Buy), and below it if you are
looking to sell
A High Probability POI must be unmitigated
POINT OF INTEREST IN SMC
Supply and demand zones
Order Block , Breaker block And order flow
imbalance
Liquidity
1. SUPPLY AND DEMAND ZONE OR ORDER BLOCK (UNMITIGATED WICK)
Supply And Demand Zone or Order Block, are footprints left by the market when an impulsive move
occurs. Price is most likely to come back to those zones before it trigger another impulse move to
continue his trend. Demand zones stand as buying area and supply zones as selling area. The footprints
left may be either a ranging market or opposite candles before an impulse move. By opposite candles we
mean, bearish candles before a bullish impulse move, or bullish candles before bearish impulsion. So we
have to combine our market structure analysis, such as the buy low and sell high strategy, and SnD.
DEMAND AND SUPPLY ZONES
The supply and demand zone can be spot on the market by a big move with a lot of momentum that
breaks the market structure. The zone is generally accumulation before the bump, in those accumulation
there are a lot of liquidity generated and once price comes back, it uses this liquidity pool to create a
move with a lot of momentum!
ZONE SELECTION: I PERSONALLY FOLLOW 4 RULES FOR MY ZONES.
1st rule: Break market structure with momentum
2rd rule: Liquidity (Accumulation)
3th rule: Imbalance
ORDER BLOCK
Last buying candle before sell is and last selling candle before buy is order block. Is the an area in a
market where significant player places orders, followed by a Large impulsive move that break
Structures.- Price returns to these areas gather more orders. Price must have proper imbalance and BOS
to confirm Order Block. An order block also act as liquidity since it attracts the price. Combining with the
concept of imbalance, we can refine an order block until there is no more imbalance in it. We can go to
the lowest timeframe and refine our zone, since we understand that price still may fill all the imbalance
before reacting. So refine it until you have find the last point of liquidity that price may reach.
Once price reaches and react to an order block, we are saying that this order block has been mitigated,
and can never be mitigated a second time.
UNMITIGATED WICK
If the supply/demand wick is larger than the body I'll pull just the wick. However if you're unsure just use
the above method. We need to find the candle that took the liquidity from the previous one. This will be
the highest candle, and the lowest. The essential criteria for marking a relevant Order Block are:
Presence of taken liquidity
Presence of a current imbalance
If the block has no imbalance, take the next candle and check for its imbalance. If you'll be
marking candles as blocks that didn't take liquidity, then you might end up becoming the liquidity
yourself..
BREAKER BLOCK
The Breaker Block is simply an Order block that was not respected, so when price breaks through the
Order block, the market can return to it on the other side and use it to make its move.
IMBALANCE
Imbalance is a price gap (price inefficiency) that is marked as a gap between three consecutive
candles . Behind the bullish imbalance are more buyers, and behind the bearish more sellers. When
there’s a sharp market movement up or down, and the shadows of the candles don't overlap, that's
precisely where the market imbalance occurs. The candle that's at the peak is the primary one,
and it's from this candle that the search for imbalance begins, not from the ones inside.
Price generally drop sharply or Push Higher in unhealthy Way then market try to pullback to fill
imbalance. Generally we use in During POl & Order Block Marking. Given examples to find extreme
imbalance because most of the time Fill imbalance it’s not necessary to fill every time because there are
lots of different factor to fill imbalance on specific point. Imbalance mainly use during entry time to Find
POl and Order Block
ORDER FLOW
Order Flow is the last impulsive movement before the price reversal. A specific area which is
formed before the buy or sell trend, like this, last buying move before sell is called Bearish Order Flow.
Last selling Move before buy is called Bullish Order Flow.
After the formation of the Order Block and Order Flow, the price goes lower. the price doesn't reach
the target and bounces off the order flow. Order Flow is the block on the higher timeframe,
IFC (INSTITUTIONAL FUNDING CANDLE)
This is candle that it Sweep high/low of the previous candle and Push Higher or Lower. This condition is
commonly referred to as grabbing liquidity. When an order block collects the stop loss high/low of the
previous candle and goes up or Down.
MITIGATION PROCESS
Market moves by up and down in a certain direction, why price needs to make those retracements? To
facilitate their own liquidity bank and financial institution will take both buys and sells positions. In a
bullish market, more buys will be taken and vice versa in a bearish trend. Simply, the process of
mitigation shows how bank tend to generate their own liquidity. Once an OB is mitigated, it loses power.
As price has already triggered a part of the orders, there is less probabilities to get a decent position
from that one. Personally, I use the 50% of the zone to see from where it could fail
As we can see price will likely fail when price reaches its 50% or more.