Los Blancos were beaten 1-0 by Atletico Madrid on Saturday and despite putting six goals past Galatasaray in their European opener two weeks ago, supporters are yet to be convinced by the club's stuttering league form.
And the Italian coach admits he is using the air of dissatisfaction around the Santiago Bernabeu as a form of motivation.
|7/1||Real Madrid are 7/1 with Paddy Power to beat Copenhagen 3-0
"Losing a derby is not a good thing - we have to react soon by playing well and winning. I have a lot of confidence in my team and I'm sure we'll react well tomorrow.
Madrid striker Karim Benzema has been criticised for his recent form in front of goal but both Ancelotti and team-mate Sergio Ramos leapt to his defence and backed him to prove his worth.
"I don't know if Karim will start tomorrow, but if he does then I'm sure he'll have a good game," the former Paris Saint-Germain boss continued.
Ramos added: "In my opinion, Karim is one of the best strikers in the world."
Madrid top Group B ahead of the game with Copenhagen a place further back having drawn with Juventus in their first Champions League tie.