Celtic face Neil Lennon's Hibernian on Sunday at Easter Road.
The Hoops go up against former captain Lennon and his Hibs side after losing in the Champions League to Anderlecht on Tuesday night, with Lennon guiding his side to fourth in the Scottish Premiership after gaining promotion last season.
Celtic remain unbeaten in domestic football since Brendan Rodgers took office on Parkhead, and sit seven points clear of their Scottish Premiership rivals at the top of the table with 11 wins and four draws from 15 games.
Now, former Celtic and Arsenal ace Nicholas believes the trip to Easter Road will come as a huge test for Celtic's stars despite their unbeaten run, claiming that it would be "footballing script" for former Celtic manager Lennon to end the run.
"About four weeks ago they went to Aberdeen in mid-week, and everybody thought 'that would be the game'", Nicholas said. "But they absolutely battered Aberdeen; the best they have played by a mile this season.
"It would be footballing script if Hibernian and ex-Celtic manager Neil Lennon were to take the scalp off of Celtic, and they're a good side. They can be physical when it suits them, they've got good energy and they have goals in their team.
"I half-fancied Hibs to finish second in the league this season, and they've proved that much. This is a real test for Celtic, they will be tired from the game against Anderlecht and Hibs could take advantage. I see Celtic coming through, but it will be an interesting game."
Celtic drew against Hibernian at Celtic Park earlier in the season 2-2, with John McGinn's brace cancelling out Callum McGregor's goals to earn an unlikely point.
Hibs have not beaten the Bhoys in the last five meetings between the two sides, which saw Celtic striker Leigh Griffiths score the only goal of the game for former side Hibernian in a 1-0 win.
Three points for Celtic could see Rodgers side stretch their lead at the top of the Scottish Premiership to 10 points, if Rangers lose to Ross County on Saturday afternoon.