Jurgen Klopp was left frustrated with Liverpool's inability to score after a performance he called "90 per cent positive" in the defeat by Everton.
Everton ended their 22-year wait for a Merseyside derby win at Anfield with a 2-0 victory which consigned Liverpool to their worst home league run in almost a century.
Victory, their first in 23 derbies, saw Everton draw level on 40 points with their sixth-placed hosts and with a match in hand.
The last time Liverpool lost four league games in a row at home was in 1923. Klopp saw his team fail to score at Anfield for the fourth time in their last five matches with Jamie Carragher particularly scathing on Liverpool's attacking players, saying "they got everything they deserved."
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Klopp told Sky Sports: "The first goal, which we have to defend better, gave the direction of the game. It was unnecessary.
"There were plenty of good football moments so we did well from a creative point of view but we had to chase the game and were not calm enough.
"Everton defended deep and full of passion but there were still moments where we were completely free in the box but we didn't finish.
"In the second half, we changed formation a little because we wanted to cause them more problems. Immediately we had big chances. Sadio [Mane] twice in the box and Bobby [Firmino] was twice in promising positions, so we had all these moments.
"The penalty was late and wasn't really decisive so we don't have to talk about that too much.
"We could talk about this for an hour in detail and you would realise what you were talking about would be 90 per positive but 10 per cent was not and we have to change 10 per cent because it makes the difference result wise.
"We stand here having lost 2-0. I know how important it is. We feel it deep inside. But from tomorrow on I have to use all the good stuff. These good situations are the guarantee that we can change it but the decisive moments we have to change as well."
Ancelotti praises Everton spirit
Everton boss Ancelotti has now beaten Liverpool in his managerial career with five different clubs: AC Milan, Chelsea, Real Madrid, Napoli and now Everton.
"I'm really happy," Ancelotti said.
"What it means, this victory, is that we can compete. Using our quality, which is not the same technical quality of Liverpool, but we have a strong spirit in this period and our belief is improving.
"The performance was good, it was difficult, but the spirit of the team was good.
"We competed really well and were clinical in front. We didn't have a lot of opportunities but the opportunities we did have we were able to convert them really well.
"We worked hard defensively. The performance of Jordan Pickford and the back at the back was really, really good. We were then clinical in front with James and Richarlison."
Analysis: Liverpool's problems deepen
Sky Sports' Nick Wright:
Liverpool dominated possession and territory but the lack of cutting edge at Anfield was striking.
Their only meaningful chances in the first period came from long-range efforts and when they did find themselves in more dangerous positions after the break, the finishing was woeful.
Carragher summed it up. "Even though Liverpool have dominated possession, it means nothing if you create nothing," he said. "That is a big problem for this Liverpool team at the moment.
"We keep talking about Virgil van Dijk and the problems at the back but very rarely when you see Liverpool play now do you expect them to score a goal.
"Going forward is as big a problem as what we are seeing defensively from Liverpool now."
The lack of composure in front of goal was summed up by Firmino, who blasted horribly over when presented with a clear sight of goal on the edge of the Everton box in the 73rd minute, then dragged another effort wastefully wide in the closing stages.
Jordan Pickford deserves credit for his performance in goal, of course, but Firmino was not the only one to waste opportunities.
Mane was well-placed to score on more than one occasion and Salah's one-on-one miss in the second half was also a big moment.