However the Spaniard said the good news did not mean he would necessarily be attacking his rivals in a bid to close his deficit of 1min 41sec and 1:30 to Australian Cadel Evans and Andy Schleck of Luxembourg respectively.
The 211 km 12th stage Thursday takes the peloton over the Ancizan and Tourmalet mountain passes before starting the 13 km climb to the summit of Luz Ardiden.
Contador, who compounded an existing knee pain in a crash on Sunday, has been praying for the pain to dissipate and the swelling to go down before then.
After completing the mainly flat 11th stage Wednesday in an apparent mood of optimism he admitted, however, he had yet to fully test it on a big climb.
"My knee is feeling good so I'm very happy, although we can't forget that I haven't climbed the Tourmalet yet," said the Spaniard.
Contador was keeping mum over whther the pain would allow him to attack or not.
"I'll see how things are going and I will decide when we reach the final climb (to Luz Ardiden)."
Contador finished the 11th stage, won by sprinter Mark Cavendish, with all the yellow jersey favourites. Despite heavy rain, he managed to avoid crashing, as he has already done four times on the race so far.
"My knee wasn't giving me any bother. Maybe the rain was good for me, it was like having an ice pack," he added.
"Tomorrow (Thursday) will be a difficult day, the first day that the favourites will be expected to show just how good they are on some very hard climbs.
"We'll see how the legs respond," added Contador, who despite needing to make up time affirmed he may try to keep his powder dry for later in the race. Three crucial days in the Alps begin on stage 17.
"I'm still getting over my crashes so maybe the best time for me will come a bit later. The Pyrenees and the Alps are as important as each other.
"At Luz-Ardiden everyone will be waiting for things to happen. Certain riders have to get things going, in particular the Schleck brothers.
"But until we see how the stage goes, we can't say anything more about it. The weather could also play a major role."