How to Use the RSC Mansfield Indicator for Strength

The RSC Mansfield (Relative Strength Comparison of Mansfield) is a relative strength indicator that provides us with information about the strength of our value or sector, compared to the value we take as a reference. That is, it is a comparison tool that allows us to compare our value, telling us if it performs better or worse than the index we have taken as a pattern.

RSC Mansfield

Normally the American index S&P500 is taken as a reference since it is the most followed by analysts worldwide and a reference to the world economy. You can download our free technical indicators guide if you are interested in this type of analysis.

What is RSC Mansfield? | Formula

As I just mentioned, it is a very useful strength indicator for investing in stocks. It shows if the value we are interested in has strength compared to another value. So, this indicator basically compares.

In order to calculate the RSC Mansfield we must use a weekly chart, with an average of 52 weeks. Therefore, the idea here is to make medium or long-term investments. We can calculate it with the following formula:

  • BP (Previous Base) = (R(1) + R (2) + … +R (52))/52 or in other words:
  • Ratio = Price of the base asset / Price of the asset we want to compare it with.

We must refrain from using this indicator on a daily or hourly basis because the number of erratic signals that will appear will make it serve us very little. If we want to buy or sell assets in the short term, this probably won't be your best indicator.

You can compare two assets, whatever they may be, for example, we can compare cryptocurrencies with the market consensus or with Bitcoin itself to see if they do better or worse.

In our next example, we are going to compare the performance of the Ibex35 against the SP500 to see the evolution:

mansfield relative strength

As you can see, the Spanish stock market as a whole has not been able to do better than the USA except for very specific periods of time. It is true that the Ibex 35 is not adjusted for dividends, but even with that nuance, it has not been able to beat it. Currently, the second half of 2022 is showing better relative performance.

What is the RSC Mansfield used for?

The RSC Mansfield is an indicator designed to analyse long-term values, therefore, it will not be useful for trading operations. Although this tool gives us a lot of information about the market, it should not be considered as the only one when making investment decisions. We must be attentive to other factors such as the sector to which the value belongs, the technical structure, the volume, and the fundamentals.

How can we interpret the RSC Mansfield?

We can find our Rsc Mansfield indicator at the bottom of the chart. The chosen value is Apple Inc. one of the world's technological giants. The indicator is interpreted as follows:

  • Green Color: The RSC of Mansfield is above 0, so it is indicating that the value or sector is performing better than the reference index. It means that the asset we are comparing it to been growing more than average in the last 52 weeks and therefore are stronger stock or sector than the SP500. It will be a very powerful signal to identify titles with a strong potential for revaluation since a priori they will rise more than the market and also fall less than the same.
  • Red Color: The RSC of Mansfield is below 0, so it is indicating that the value or sector is performing worse than the reference index. If it is below that 0 it indicates that the absolute value of the index is not very relevant and that it is behaving even worse than the market average, so we should refrain from looking for titles with negative Mansfield.
  • If it is equal to zero: It behaves the same as the market, we will have to wait if it clearly breaks up or down the indicator.

We can also observe that the value can grow and decrease, regardless of whether it is above or below 0. This tells us the following:

  • When the value grows, it tends to behave better
  • When the value decreases, it is starting to behave worse than the reference index.

Graphic Example of RSC Mansfield

In the following graph of the company Ezentis we have represented the quotation of the company in weekly graphs, that is, each candle is a week of quotation. Just at the bottom of the graph, we find the RSC Mansfield indicator.

relative strength formula
Graphical representation the quotation of RC Mansfield in weekly graphs.

In the first part of the graph, when the price starts to fall and starts to take a bearish trend, the indicator RSC Mansfield begins to decrease (red zone). On the contrary, we observe that when the price starts to rise, the RSC Mansfield changes its slope and begins to grow until it surpasses the line of 0 (going from red to green).

FAQs

Can RSC Mansfield be used for short-term trading?

The Mansfield RSC, when combined with other indicators and adjusted for short time ranges, can help with short-term trading. However, as a lagging market-sensitive tool, it requires careful risk management and market research to be used effectively.

What factors should be considered along with RSC Mansfield?

Other factors such as the sector to which the value belongs, technical structure, volume, and fundamentals should also be considered.

Can RSC Mansfield be used to compare different assets?

Yes, RSC Mansfield can be used to compare different assets, such as cryptocurrencies against market consensus or Bitcoin, to determine their relative performance.

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