The Nikkei .N225 was likely to trade between 9,700 and 9,850 after hitting a fresh seven-month closing high in the previous session, strategists said. Nikkei futures in Chicago closed at 9,785 on Tuesday, up 25 points or 0.3 percent from the Osaka close of 9,760.
"The New York stock markets went up. It's a good catalyst for Japanese stocks. We will be going to, maybe, 9,800," said Takashi Hiroki, chief strategist at Monex Inc.
The Dow Jones industiral average .DJI closed above 13,000 for the first time since May 2008 on Tuesday and the S&P 500 also hit a milestone, as buoyant U.S. consumer confidence data and a sharp drop in oil prices nudged the nearly five-month rally forward.
The benchmark Nikkei closed 0.9 percent higher at 9,722.52 on Tuesday, taking this month's gains to 10.5 percent, which would mark its best February performance since 1991.
The broader Topix .TOPX advanced 0.4 percent to 838.48.
But Hiroki added that many technical charts showed the Nikkei was "overheating" following the recent rally.
The Nikkei was deep in "overbought" territory, with the 14-day relative strength index at 82, while slow stochastic, a short-term momentum indicator, also pointed to a retreat.
Global equities have been buoyed by a run of strong U.S. economic data, the European Central Bank's nearly half a trillion euro liquidity injection late last year, and further easing steps by the Bank of Japan and the Bank of England.
Investors will focus on Wednesday on the size of the ECB's longer term refinancing operation gross allotment, as well as net new liquidity. A Reuters poll showed 30 euro money market traders expected the ECB to allot 500 billion euros ($669.75 billion). > Dow, S&P hit milestones on confidence, cheaper oil
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