In a tight encounter, City were beaten 1-0 at Stamford Bridge with Sandy Baltimore getting the only goal of the game on the stroke of half-time.
Goalkeeper Ayaka Yamashita was sent off in the second half as we chased an equaliser.
The result means we slip to second in the Women’s Super League but Knaak says there are plenty of positives to build on.
“Especially in the first half, we had control of the game,” she said.
“It was a very tight game and we knew that. I think we lost momentum maybe in the last five minutes of the first half when they scored which was obviously not the best time.
“But still we showed a good reaction. And I think even with 10, still after that we showed that we can play and we never gave up and I think we could have deserved more here.
“We’ve been smart with the way we’ve wanted to play but maybe we’ve not created as many chances as we’d perhaps have liked to and didn’t score today.
“That’s something we’ll want to work on and defensively there are always things to improve which we’ll look at tomorrow.
“I think it’s just maintaining a compact team and keeping a clean sheet and scoring goals again.”
City started brightly with Aobo Fujino twice going close in the opening 10 minutes and Knaak says the team always play to win.
“That’s our mentality,” she added. “I don’t think we would ever go into a game and try to draw.
“We always try to win a game. That’s why we’re here, why we play football.
“In the end, a loss really hurts. Right now it’s a lot of frustration but there’s also a lot of things we can be proud of and from tomorrow onwards we’ll look forwards and try to win the next game.”
It was also a proud day for Knaak as she wore the captain’s armband for the first time.
“It’s a very big honour,” she added. “I’m just trying to help out and Alex [Greenwood] is doing a great job.
“We have a lot of great leaders in the team. But it was obviously a big honour.”