The Toffees will host their biggest rivals at Goodison Park on Saturday sitting top of the table, the position that Liverpool finished last season as the best team in the country.
But the tables have turned at the start of 2020/21 and Ancelotti wants his Premier League leaders to extend their 100 per cent start and move closer to their goal of European qualification.
"Our target is to reach Europe next season and to stay at the top for as long as possible," said the Italian after winning the fifth Barclays Manager of the Month award of his career.
"We are going to play against one of the best teams in the world.
"It doesn't matter what happened last week [against Aston Villa]. They are still a fantastic team with a fantastic manager.
"It will be difficult, but we have confidence."