The Blues only managed a 1-1 draw with Blackburn while United won 2-1 at home against Liverpool on Sunday.
“Manchester United are top of the league so are now the favourites,” Ancelotti told the Daily Star.
“It will be more difficult now to win the title, but it is not impossible.
“This is not an easy moment for us, but we must not lose our confidence.”
He added: “Now we are third, it means we have to run more.
“We need to regain our momentum.
“But I still think we can do it although we must win our next game.”
