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.
Of course, they are going to need to work hard to actually stay at the top of the competition. No club is actually going to be able to perform badly and stay at the top. Not even the great Real Madrid. But so far I don't think we actually have got any reason to doubt Real Madrid. They have shown good performance and they also have been able to win against the biggest competitor which is Barcelona. They just need to make sure that the players stay healthy and do not get injured. Especially Jude Bellingham, who has been doing the bulk of the scoring for Real Madrid in this season. he has been the biggest success so far for Real Madrid recently.