By Candice Zachariahs

Feb. 11 (Bloomberg) -- Investors should buy Australia’s dollar betting the currency will gain more than 7 percent after holding above its 200-day moving average, Citigroup Inc. said. The so-called Aussie also formed a “bullish outside day,” on Feb. 9, Citigroup said. That’s a pattern that occurs when a currency dips below the intra-day low of the previous day and then rises above the previous high, signaling a possible rally. Australia’s dollar fell as low as 85.79 U.S. cents on Feb. 5, near its 200-day moving average. In the following session on Feb. 8 it traded between 86.41 cents and 86.47 cents before rising as much as 1.7 percent the next day, from as low as 86.15 to as much as 87.97 cents.

A “bullish outside day above the 200-day moving average suggests a rally ahead,” New York-based Tom Fitzpatrick and Aron Gera and London-based Shyam Devani wrote in a research note yesterday. “Could we see a rally to the highs at 94.07 again?” Investors should buy the Australian dollar at 87.36 cents and target a rise to 92 cents and “possibly 94-plus,” the bank said. Australia’s currency traded at 87.53 U.S. cents as of 9:48 a.m. in Sydney. It touched 94.06 cents on Nov. 16, the most since August 2008, according to Bloomberg data. The Aussie will face resistance at 89.06 cents, 89.46 cents and then 93.25 cents, they wrote.