Although Real Madrid has good results so far this season in La Liga and also in the Champions League, but still Real Madrid also still has to work hard to remain consistent throughout this season. Because anyway, I think Real Madrid is also not always easy to win in every match so far this season. But yes, although it is not easy but because Real Madrid has a very good winning mentality, then of course Real Madrid managed to achieve good results in every match. So yes, of course Real Madrid will have a chance to be able to advance to the final match also in the Champions League this season. Also consider, that Ancelotti contract will also expire at the end of this season, so that factor will make Ancelotti work hard to give Real Madrid many trophies this season.
You're right. There is no guarantee that Real Madrid will always perform well. Although they played quite well lately, it can be changed in the next few matches. Specifically for the matches in UCL, it will be more difficult when it goes to the knockout phase. There are many strong teams in UCL, Real Madrid can get difficulty to win the next matches. I still expect that Real Madrid can sign a new top striker in the next transfer window, it can help them to maintain good performance. Although Real Madrid players have good mentality, they can't play with their best level without a strong striker. I think they can't rely on Bellingham forever.
Regarding Ancelotti, he is rumored to be the coach of Brazilian team. He surely won't extend his contract with Real Madrid. Sure, he wants to give his best before he leaves Real Madrid. And all the players of Real Madrid must support it, they must try all out to get the trophy this season. However, winning the trophy isn't something easy, especially to win UCL trophy.
Real Madrid is this team that is dangerous until the last second of the game also when they are down a goal or two. They have demonstrated that in a perfect manner in the Champions League in the last few years and they have also done that a couple of times this season in La Liga and also in the group stage of the Champions League. There have been a few situations when I counted them out because I thought it must be impossible for them to still tie or win a game and then it still happened. I think for as long as they are not brutally weak, losing games as if they severely lack quality, I would consider them one of the favorites for the title anytime. Specifically now that Bellingham is playing in a different sphere. He could be the decisive factor for them in many games if he doesn't get any issues with his fitness.