City dominated for large periods of the match after taking an early lead through Ian Poveda, but the visitors were never truly out of the contest and Traore’s abundance of pace carved a number of chances.
The right winger set-up Davide Ghislandi for the equaliser, before Roberto Piccoli’s clinical strike put the Italian outfit in the driving seat and with City chasing the game, the Ivorian punished us with a mazy run and finish.
City settled quickly and made a bright start, dominating possession and penning Atalanta in their own half.
Slick interplay between Eric Garcia, Tommy Doyle and Poveda opened the visitors up as early as the first minute, but Nabil Touaizi couldn’t get on the end of Poveda’s cross-cum-shot.
If that was a tentative warning of how quickly City turn defence into attack, Taylor Harwood-Bellis' towering far post header – well saved by visiting keeper Ludovico Gelmi - from Tommy Doyle’s corner was evidence Paul Harsley’s side could pose the physical Italians a more direct threat.
Substance and style then dovetailed to great effect as City opened the scoring.
Adrian Bernabe collected Morgan Rogers' reverse pass, raced down the inside left channel and squared for Poveda to sweep home from 12-yards.
The goal galvanised Atalanta and in particular, their most potent attacking threat, the lightening quick Traore.
He proved to be a constant menace from his first real involvement, playing a one two with Piccoli and crossing for Nicolo Cambiaghi, whose drilled effort forced Gavin Bazunu into a superb reflex save from point blank range.
A minute later Traore’s deadly direct running reaped its reward when his cut-back was finished at the near post by Ghislandi.
From there the game developed into a more even contest, but when City neither played out from the back nor cleared the ball, Atalanta capitalised minutes after the restart.
Ghislandi was again involved, picking up a loose ball on the edge of the area and teeing up Piccoli, who fired into the bottom left corner from 12-yards.
Having taken the lead, the visitors seemed content to protect it and happily conceded territory and possession to Harsley’s youngsters for the remainder of the contest.
City probed, but couldn't conjure a telling pass to unlock a stubborn defence and Atalanta's victory was all but sealed when Traore rode several challenges on another tricky run before sliding the ball beyond Bazunu with 12 minutes remaining.
City tried to capitalise on the celebrations by taking a quick restart, but the referee called play back and the Italians' defence held firm in the closing stages to see out the victory.
How we lined up
Bazunu’s goal was protected by a back four with first team experience.
Alpha Diounkou, Garcia and Harwood-Bellis have all been involved in senior squads this season, with Nathanael Ogbeta joining them at left-back.
Iker Pozo was the deep lying midfielder with Doyle and Bernabe ahead of him. Rogers and Poveda operated either side of Touaizi in the forward line.
What it means
The defeat leaves us in third place at the halfway stage in Group C, with one win, one draw and one loss from our opening three games.
Atalanta are level on points with us in second place, while Dinamo Zagreb top the group with one win and two draws.
Fourth placed Shakhtar Donetsk have two points, meaning it is all to play for in the second half of the campaign, when City will travel to Croatia and Italy and host the Ukrainian's at the Academy Stadium.
Harsley’s side have three days to recover before facing Arsenal in the Premier League 2 on Saturday at 4.30pm.
Our EDS are currently on a four-match winless run in the league but will hope to get back to winning ways against the fourth placed Gunners who have failed to take three points in their last three attempts.
Recovery time is again limited after that, as our U21 squad travel to Bolton Wanderers in the Leasing.Com Trophy on Tuesday 29 October.
Harsley’s squad have been in fine form in the competition, winning both of our opening games and are already guaranteed to qualify for the knockout stage as Group F winners.