The Scots were left shell-shocked after a late Lucas Amorosino try - coupled with Felipe Contepomi's conversion - condemned them to a 13-12 defeat.
That result means Scotland need to beat England by eight or more points in their final pool match at Eden Park to reach the last eight.
And having drawn with England at Murrayfield in 2009 and lost narrowly at Twickenham in this year's RBS Six Nations, Townsend is confident Scotland can bounce back.
Townsend said: "The players are really disappointed. There was a lot of emotion last night in the changing room.
"To put in that huge effort, to be leading for most of the game and then lose, there's no worse feeling in sport.
"But we're still in this tournament. We've got a goal - we must win and if we can win by more than seven then it puts us in with a really good position of going through.
"The boys will be focused and there will be a belief, given our performance at Twickenham this year and at Murrayfield the year before that, we can do it."
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