diff --git a/packages/builder/src/components/common/NavItem.svelte b/packages/builder/src/components/common/NavItem.svelte
index 5b8c416260..f0c447826e 100644
--- a/packages/builder/src/components/common/NavItem.svelte
+++ b/packages/builder/src/components/common/NavItem.svelte
@@ -138,6 +138,7 @@
     overflow: hidden;
     position: relative;
     padding-left: var(--spacing-l);
+    pointer-events: none;
   }
 
   /* Needed to fully display the actions icon */
diff --git a/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/ComponentTree.svelte b/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/ComponentTree.svelte
index fc5e5fb148..d7e6500dd1 100644
--- a/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/ComponentTree.svelte
+++ b/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/ComponentTree.svelte
@@ -19,6 +19,7 @@
   export let dragDropStore
 
   let closedNodes = {}
+  let indicatorY = 0
 
   const dragstart = component => e => {
     e.dataTransfer.dropEffect = DropEffect.MOVE
@@ -29,18 +30,19 @@
     const definition = store.actions.components.getDefinition(
       component._component
     )
-    const canHaveChildrenButIsEmpty =
-      definition?.hasChildren && !component._children?.length
+    const canHaveChildren = definition?.hasChildren
 
     e.dataTransfer.dropEffect = DropEffect.COPY
 
     // how far down the mouse pointer is on the drop target
     const mousePosition = e.offsetY / e.currentTarget.offsetHeight
 
+    indicatorY = e.currentTarget.offsetTop
+
     dragDropStore.actions.dragover({
       component,
       index,
-      canHaveChildrenButIsEmpty,
+      canHaveChildren,
       mousePosition,
     })
 
@@ -62,9 +64,13 @@
     return def?.icon
   }
 
-  const componentHasChildren = component => {
+  const componentSupportsChildren = component => {
     const def = store.actions.components.getDefinition(component?._component)
-    return def?.hasChildren && component._children?.length
+    return def?.hasChildren
+  }
+
+  const componentHasChildren = component => {
+    return componentSupportsChildren(component) && component._children?.length
   }
 
   function toggleNodeOpen(componentId) {
@@ -111,13 +117,17 @@
         $store.selectedComponentId = component._id
       }}
     >
-      {#if $dragDropStore?.targetComponent === component && $dragDropStore.dropPosition === DropPosition.ABOVE}
+      {#if dragDropStore && $dragDropStore?.targetComponent === component}
         <div
+          class:above={$dragDropStore.dropPosition === DropPosition.ABOVE}
+          class:below={$dragDropStore.dropPosition === DropPosition.BELOW}
+          class:inside={$dragDropStore.dropPosition === DropPosition.INSIDE}
           on:drop={onDrop}
           ondragover="return false"
           ondragenter="return false"
           class="drop-item"
-          style="margin-left: {(level + 1) * 16}px"
+          style="--indicatorX: {(level + 2) *
+            14}px; --indicatorY:{indicatorY}px;"
         />
       {/if}
 
@@ -148,18 +158,6 @@
           level={level + 1}
         />
       {/if}
-
-      {#if $dragDropStore?.targetComponent === component && ($dragDropStore.dropPosition === DropPosition.INSIDE || $dragDropStore.dropPosition === DropPosition.BELOW)}
-        <div
-          on:drop={onDrop}
-          ondragover="return false"
-          ondragenter="return false"
-          class="drop-item"
-          style="margin-left: {(level +
-            ($dragDropStore.dropPosition === DropPosition.INSIDE ? 3 : 1)) *
-            16}px"
-        />
-      {/if}
     </li>
   {/each}
 </ul>
@@ -183,8 +181,25 @@
   }
 
   .drop-item {
-    border-radius: var(--border-radius-m);
+    height: 2px;
+    background: green;
+    z-index: 999;
+    position: absolute;
+    top: calc(var(--indicatorY) - 1px);
+    left: var(--indicatorX);
+    width: 100px;
+  }
+  .drop-item.above {
+    background: red;
+  }
+  .drop-item.below {
+    background: blue;
+    margin-top: 32px;
+  }
+  .drop-item.inside {
+    background: transparent;
+    border: 2px solid green;
     height: 32px;
-    background: var(--grey-3);
+    pointer-events: none;
   }
 </style>
diff --git a/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/dragDropStore.js b/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/dragDropStore.js
index d965a2456d..3355c876bc 100644
--- a/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/dragDropStore.js
+++ b/packages/builder/src/pages/builder/app/[application]/design/[screenId]/components/[componentId]/_components/navigation/dragDropStore.js
@@ -23,44 +23,29 @@ export default function () {
         return state
       })
     },
-    dragover: ({
-      component,
-      index,
-      canHaveChildrenButIsEmpty,
-      mousePosition,
-    }) => {
+    dragover: ({ component, canHaveChildren, mousePosition }) => {
       store.update(state => {
         state.targetComponent = component
         // only allow dropping inside when container is empty
         // if container has children, drag over them
 
-        if (canHaveChildrenButIsEmpty && index === 0) {
-          // hovered above center of target
-          if (mousePosition < 0.4) {
+        if (canHaveChildren) {
+          if (mousePosition <= 0.33) {
+            // hovered above center of target
             state.dropPosition = DropPosition.ABOVE
-          }
-
-          // hovered around bottom of target
-          if (mousePosition > 0.8) {
+          } else if (mousePosition >= 0.66) {
+            // hovered around bottom of target
             state.dropPosition = DropPosition.BELOW
-          }
-
-          // hovered in center of target
-          if (mousePosition > 0.4 && mousePosition < 0.8) {
+          } else {
+            // hovered in center of target
             state.dropPosition = DropPosition.INSIDE
           }
           return state
         }
 
         // bottom half
-        if (mousePosition > 0.5) {
-          state.dropPosition = DropPosition.BELOW
-        } else {
-          state.dropPosition = canHaveChildrenButIsEmpty
-            ? DropPosition.INSIDE
-            : DropPosition.ABOVE
-        }
-
+        state.dropPosition =
+          mousePosition > 0.5 ? DropPosition.BELOW : DropPosition.ABOVE
         return state
       })
     },