Billy McNeill believes Celtic are favourites going into the Old Firm derby against Rangers at Celtic Park on 28 December.
Neil Lennon's side have won seven Scottish Premier League matches in a row to reduce the gap between them and leaders Rangers to four points.
McNeill captained the side to their European Cup win in 1967 and later managed the club. He said: "Celtic have got to be favourites. They are sitting in a powerful position and have played some nice football. Things look good for them. This part of the season is one that proves if a team are capable of winning the league.
"This is often when teams lose their way but at the moment Celtic look positive and look as if they have got a team capable of winning.
"I think Neil Lennon's team are playing well enough to get to the top of the league. I was interested in how the mix of players would get together as a team but Neil has worked very well. He has been very positive in what he has done.
"The Old Firm game is always important. A result in it would work wonders for Celtic."
McNeill was less enthusiastic about those Celtic fans who have landed the club in trouble with the sport's ruling bodies.
Yesterday, Uefa confirmed they had opened disciplinary proceedings against the club, charging them with "displaying of a banner of an offensive nature and the setting off of fireworks by supporters" during their Europa League game against Udinese in Italy last week.
The incidents came days after the club were fined £12,700 for "illicit chanting" involving pro-IRA songs at a Europa League game against Rennes at Celtic Park in November.
McNeill said: "Celtic have to show that they are not going to accept that type of behaviour.
"It is evident that they are disappointed. I have seen loads of things and I often wondered why Uefa didn't step in and do something about it.
"I think Uefa pick and choose," he added. "They have now decided to jump on Celtic's tails, but it is necessary in any event and here's hoping that the fans take heed. Celtic have always had a great support and it is disappointing to see people being as daft as they have been.
"But I think it is a small amount of fans who have misbehaved."
Celtic, meanwhile, have confirmed that Daniel Majstorovic will be out for six weeks after surgery on the fractured cheekbone he sustained in the 2-0 win against St Johnstone on Sunday.
However, midfielder Joe Ledley has returned to training after recovering from an ankle injury and will be available for selection on Saturday for the game against Kilmarnock.