Wales trailed the All Blacks 23-0 at half time last Saturday but outscored the world’s best side by two tries to one in what was a dramatically improved second half.
Scott Williams and Alex Cuthbert both crossed after half time and Priestland says the improvement in performance is a positive sign.
“All round it was much better against New Zealand than what it has been,” said the Scarlets man.
“All we can do is prepare this week as we did last week. We were much better than in the first two weeks. As a team we’ve been miles off against Argentina and Samoa but that’s made us stronger.
“We’ve never thrown the towel in and it was good that we scored two second half tries.”
Wales’ first try came via an unusual 13 man lineout, Williams the beneficiary as they caught the New Zealand defence off guard.
And Priestland believes those sort of unusual tactics can catch some of the world’s best sides, including Australia, unaware.
“We did take a few risks going for touch instead of the points but as you could see with the 13 man lineout we had a few tricks up our sleeve,” he added.
“We had to throw caution to the wind and maybe if things had gone a little bit different we’d have been in touch at half time.
“Sometimes things go your way but we can’t be too downhearted and we’ll prepare this week as we did last week and hopefully we’ll have a bit more luck and get a result against Australia.”
The Wales team who will face the Wallabies is still to be decided with the team announcement delayed until later this week.
Wales suffered further injuries against the All Blacks and although Priestland admits the situation is far from ideal, he says those coming in are hungry to prove a point.
“The injuries are starting to build up now but I thought the boys who came on (against New Zealand) did well,” he said.
“It gave a few boys an opportunity and I think they did well when they came on.”
Tickets are still available for the game with Australia priced at £60 from the WRU Ticket Store (St David’s Dewi Sant), via Ticketmaster (08442 777888 and www.ticketmaster.com) and Ticketline. (02920 230130 and www.ticketlineuk.com)