ICT ATM Method – A Simple Approach to Directional Price Delivery

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The ICT ATM method is a trading concept that can be used to study directional price delivery. The idea is to understand the conditions that are developing in the market and then determine whether price is showing signs of a bullish or bearish move.

Many traders make the mistake of looking for an entry before understanding the condition of the market. This often leads to trades being taken simply because price moved in one direction for a few candles.

The ATM method can help bring more structure to the analysis. Instead of reacting to every movement traders can first study the market condition and then wait for price to develop in the expected direction.

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What Is The ICT ATM Model

The ICT ATM method can be viewed as a framework for reading price delivery.

The main idea is not to enter the market simply because a candle looks bearish or bullish. The trader needs to understand what is happening around the price movement and whether the market conditions support the directional idea.

This makes the ATM model more of a market reading process than a simple buy or sell signal. A trader can use the model to develop a directional bias and then wait for price to provide the conditions needed for a possible trade.

This is important because the market does not move in a straight line. Even during a strong bearish move there can be temporary bullish price action. The same thing happens during bullish conditions when price can temporarily move lower before continuing higher.

Understanding the condition helps the trader avoid reacting to every small movement. So this method basically focuses on the directional bias and large price movements ultimately larger trades too.

Components Of ICT ATM Method

To understand the ICT ATM model properly we first need to define its main components. The model is built around short-term highs and lows and the key highs and key lows that are created when price breaks the previous short-term structure.

These formations are important because they help us understand where the market has established a structure and where that structure has been violated.

The ATM model can be used in both bearish and bullish conditions. The bearish condition is built around a short-term low and a key high. The bullish condition uses the opposite structure which is a short-term high and a key low.

What Is a Short-Term Low?

A short-term low is a simple three-candle formation where the middle candle forms the low while the candle on its left and the candle on its right both have higher lows.

In simple terms the middle candle has a lower low than the candles immediately before and after it, this creates a short-term swing low.

However there is an important difference between a normal short-term low and the short-term low that we are looking for in the ATM model.

For the ATM model the short-term low must be part of a continuous sequence of higher highs and higher lows.

The market should be moving higher and creating a bullish structure. Price forms a short-term low and then moves higher to take the previous high. The market continues this pattern by creating higher highs and higher lows.

At this point the short-term low becomes important because it represents one of the structural lows within the bullish sequence.

What Is A Short-Term High?

A short-term high is also a three-candle formation where the middle candle forms the high while the candle on its left and the candle on its right both have lower highs.

In other words the middle candle has a higher high than the candles immediately before and after it.

This creates a short-term swing high.

But just like the bearish setup the short-term high needs to be viewed in the context of the surrounding market structure.

For the bullish ATM model we want to see a continuous sequence of lower lows and lower highs.

The market is moving lower and creating bearish structure. A short-term high forms within that sequence and price continues lower to take the previous low.

You can see the example of these short term lows and highs via an illustration given below:

What Is A Key High?

A key high is the high that forms when price has taken previous high and then it breaks below the relevant short-term low. It is not simply any swing high on the chart.

This key high becomes an important reference point for the bearish ATM model.

What Is A Key Low?

A key low is the low that forms when price has taken the previous low and then it breaks above the relevant short-term high.

It is different from a simple swing low as it takes previous low then breaks the short term high, that’s why it becomes key low.

You can see the example of the Key low and Key high via an illustration given below:

Bullish ICT ATM Model

The bullish ICT ATM model starts by scanning the market on a 60-Minute timeframe for the right structure. For this setup we begin on the 60 minute chart and look for a key low that forms after price breaks a short-term swing high to the upside.

The key low is not simply any low on the chart. We want to see the correct sequence of market structure before the key low is formed.

Ideally the market should be moving lower with a continued sequence of lower lows and lower highs. During this move price can form a pair of swing lows and break them as the bearish structure continues.

After this continued move lower we wait for price to form a short-term swing high. When price breaks that short-term swing high to the upside the structure starts to change.

The low that forms before this upside break becomes the key low.

This gives us the important relationship needed for the bullish ATM model. We have a key low that forms after price breaks a short-term swing high to the upside.

Wait For The Retracement

Once the key low has formed we do not enter the trade immediately.

Instead we wait for price to retrace back toward the short-term swing high that was broken before the key low was formed. Now this broken swing high becomes an important area for the setup.

The idea is that price has already broken this level to the upside and established the key low. We now want to see price return toward that broken swing high.

This gives us a specific area to watch rather than chasing price after the initial move higher.

The 60 minute chart is mainly used to identify this structure and the important levels. The actual entry can then be refined using a lower timeframe.

Move To The Lower Timeframe

When price approaches the broken short-term swing high we move down to a lower timeframe.

The 15 minute or 5 minute chart can be used for the entry confirmation.

At this point we are no longer simply looking for the price to touch the level and immediately buying. We want to see confirmation on the lower timeframe.

This can come in the form of an ICT Market Structure Shift or an ICT CISD. The purpose of this confirmation is to show that price is reacting from the area and that the lower timeframe is beginning to support the bullish idea.

Stop Loss Placement

The stop loss is based on the lower timeframe structure.

After price tests the broken short-term swing high we look at the lower timeframe and identify the last swing low that formed during this test.

This lower timeframe swing low becomes the reference for the stop loss.

The idea is to place the stop beyond the structure that supported the bullish entry.

If price breaks that swing low after the bullish confirmation then the expected bullish reaction is no longer behaving as anticipated, But you can place the stop loss below the key low if your risk to reward allows it.

The exact placement of the stop can depend on the instrument and execution but the important part of the model is that the stop is based on the lower timeframe swing structure created during the test.

You can see the example of bullish ATM model in the picture given below:

Profit Target

For the profit target we can look toward the next high where liquidity may be resting.

The next high can provide a logical objective because price may seek the liquidity around that area.

Instead of choosing an arbitrary number of points or pips the target is therefore connected to the market structure.

The trader can identify the next relevant high and use the liquidity around that area as the potential profit objective.

This keeps the trade connected to the structure that created the setup.

Bearish ICT ATM Model

The bearish ICT ATM model starts by scanning the 60 minute chart for a key high that forms after price breaks a short-term swing low to the downside. We first want to see a bullish market structure with a continued sequence of higher highs and higher lows. Ideally price should have already taken a pair of swing highs before the key high is formed.

This shows that the market has been continuing higher before the structure starts to shift.

A short-term swing low then forms within this bullish structure. When price later breaks that short-term swing low to the downside the high that formed before the break becomes the key high. This key high is the main structure we are interested in for the bearish ATM model.

Once the key high has formed we do not sell immediately. Instead we wait for price to retrace back toward the short-term swing low that was broken before the key high was formed. This broken swing low becomes the important area where we start looking for the bearish setup.

When price approaches this broken swing low we move down to the 15 minute or 5 minute chart. On the lower timeframe we wait for confirmation such as an ICT MSS or ICT CISD. This confirmation helps us identify a bearish reaction from the area instead of entering simply because price has returned to the level.

After the lower timeframe confirmation appears we look for the short entry. The stop loss is based on the last lower timeframe swing high that formed while price was testing the broken short-term swing low. A break above this swing high would weaken or invalidate the expected bearish reaction so it becomes the reference point for the stop.

Alternatively you can place stop loss above key high if your risk reward ratio allows it.

For the profit target we can look toward the next low where liquidity may be resting. This gives the trade a logical objective based on the surrounding market structure instead of choosing an arbitrary number of pips.

You can see the example of bearish ATM model in the picture given below:

Final Thoughts

The ICT ATM model is best understood as a framework for reading market conditions and directional price delivery.

The bearish conditions are an important part of the model because they help traders study situations where the market may be developing toward lower prices.

The biggest mistake is treating the model as an instant entry signal.

Good analysis starts with the condition. The trader then waits for price to develop instead of chasing the move.

Avoid entering too early. Avoid forcing setups. Do not treat every bearish candle as a bearish ATM condition and do not overload the chart with unnecessary concepts.

The more useful approach is to study historical examples and understand how price behaves before and after the condition develops.

With enough chart time the ATM model can become less about memorizing a setup and more about understanding the behavior of price.

That is ultimately what makes any ICT concept more practical. The goal is not to find a signal on every chart. The goal is to recognize when the market is actually presenting the conditions worth trading.