The headline index finished 2011 at its lowest year-end level since 1982 but has since staged a rally of nearly 20 per cent on global recovery hopes and recently the yen's fall against the US dollar and euro.
The Topix index of all first-section issues ended the week at 866.73, up 18.02 points or 2.12 per cent on the preceding week.
"If we have a big positive surprise in US housing and other data, it could boost the market. Otherwise, however, Japanese stocks, as well as US stocks, will likely consolidate their recent gains," said Yumi Nishimura, senior market analyst at Daiwa Securities.
"Selling to lock in profits will continue to emerge but it will not be strong enough to send the market tumbling," she said, predicting the Nikkei index will move between 10,000 and 10,200 in the coming week.
Overall sentiment remains bullish, said Nobuyuki Kashihara, executive officer of equity investment and research department at Mizuho Asset Management.
The sentiment is supported by strong fundamental factors including a brighter outlook for corporate earnings and global economic conditions, he told Dow Jones Newswires.
An improvement in corporate earnings has not been fully factored-in, leaving room for more upside, he added.
Nomura Securities said the market was watching Japan's trade data for February, as well as other economic indicators from other countries.
"Attention is focused on whether (Japan's) deficit will shrink on the back of recovering automobile production," the brokerage said in a weekly report.
Japan incurred its first annual trade deficit for more than 30 years in 2011 after the March quake-tsunami and strong yen hit exports while high fuel costs pushed up import bills.
The country ran a record deficit of 1.475 billion yen ($A17.63 billion at the rate at the time of data announcement) in January, weighed down by hefty fuel costs.
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