E-commerce and tech giant Amazon.com  (AMZN) - Get Report is set to report first-quarter numbers after the closing bell.

Typically, an approaching earnings report injects uncertainty into shares. That’s especially true this quarter as investors try to make sense of the impact of covid-19 on the economy.

But in Amazon’s case, the risk-reward balance is very clearly defined heading into the earnings call. And that could set the stage for a breakout move this week.

Currently Wall Street analysts surveyed by FactSet are looking for Amazon to report earnings of $6.23 per share for Q1.

One of the things that makes Amazon look particularly interesting right now is simple: It’s working in this environment.

Amazon is more than 28% higher since the calendar flipped to January, boosted by more consumers moving their shopping online amid the pandemic. 

It seems simple, but buying what’s working is a sound strategy during crisis-market environments.

A look back at similar environments over the past three and a half decades shows stocks that have positive six-month relative strength saw a 78.4% chance of a positive one1-month return.

That’s about a 50% higher win rate than the average S&P 500 stock.

Another key factor working in Amazon’s favor right now is a bullish technical setup. To figure out how to trade it, we’re turning to the chart.

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Amazon’s chart is unusual right now. Beginning in mid-February the shares, and everything else, corrected hard when the full impact of covid-19 started to come into view. Then they rebounded even harder, eclipsing their prior 2020 highs.

Since then, Amazon has spent the intervening sessions trading in a tight and well-defined range, setting the stage for a potential breakout.

Range-bound trading isn’t uncommon after a big move like the one Amazon has seen. It gives buyers and sellers a chance to take a breather and figure out who’s in control .

Generally, ranges tend to resolve in the direction of their prior move. That puts the $2,450 resistance level in play today, given Amazon’s earnings call. A breakout above $2,450 is the next buy signal.

As of this writing, Amazon option volatility implies a 7.06% one-day earnings move. That would easily put the shares in breakout territory.

On the flip side, from a risk-management standpoint, a violation of the support level at the bottom of Amazon’s range at $2,300 means that sellers are in control and it’s best to stay away for now.

For that reason, it makes sense to wait for the earnings reaction to hit before building a position here.

Amazon’s upside potential is likely magnified by the fact that relative strength is statistically such a strong predictor of forward returns during market crises. 

Amazon checks all the boxes so far. If shares materially break above $2,450, then more upside looks likely over the next month.