The Hatters are two points above the relegation zone and were close to taking a point off Premier League leaders Arsenal in midweek, only to concede a last-minute winner.
James says that City can expect a physical encounter, but we must make the most of the opportunities that we create.
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“Luton have made everyone work very hard to get anything,” the former City goalkeeper said on Matchday Live.
“They are obviously in the bottom four but it’s a tough place to go. City will not have any favours given to them by Luton.
“They will come up against a lot of direct play, a lot of physicality but they do make mistakes so it’s up to City to capitalise on them to get the three points.
“If City win and Aston Villa beat Arsenal or draw, it concertinas those top four positions to make an interesting Christmas.”
Luton have lost four of their seven Premier League homes game this season but none by anything bigger than a single goal margin.
After running Arsenal close and taking a point off Liverpool earlier in the season, James believes they won’t be scared of facing anyone on their home turf.
“The home games are the ones they think they can get points off and I don’t think they care who they get them off,” he added.
“It was a dropped point against Arsenal. They’ll make games very tough. Arsenal are the only team that has scored two goals against them in the first half.
“For a team in their position you would think teams would have beaten them by three or four and would be easily in the lead.
“If there’s any weakness in the City side, they’ll try to exploit it. But they’ll also give City chances.”
It will be our first visit to Kenilworth Road in the Premier League, and first game at the stadium in 25 years.
And despite a capacity of just over 11,000, former England striker Emile Heskey says it generates a lot of noise with the home fans getting behind their side.
“Always when you’re at smaller clubs, they will always get behind their team and they’ll always make themselves known,” he said.
“They’re very close on top of you and I love those stadiums where it feels like they can touch you.
“There’s a certain pressure that comes with that but also you can thrive off that. As players we love that and they’ll definitely get behind them.”
