Manchester City defender Pablo Zabaleta accepts the fallen champions are facing a battle to finish in the top four. Zabaleta admits confidence is low with Sunday's derby loss at Manchester United having continued a dismal run which has seen City capitulate in the Barclays Premier League title race. Manuel Pellegrini's men crashed 4-2 at Old Trafford, a sixth defeat in eight games in all competitions and a result which leaves them fourth and clinging onto a Champions League place. Wayne Rooney leaps onto Fellaini's back after United take the lead through the big Belgian, who has had an excellent renaissance recently . It is a far cry from the situation on New Year's Day, when the defending champions pulled level with Chelsea at the top with a 3-2 win over Sunderland. Having been eight points behind just over a month earlier, City appeared to be clicking into gear - but all has suddenly gone wrong. They now trail the leaders by 12 points, having played a game more, and their form continues to offer encouragement for the likes of Southampton and Liverpool below them. A dejected Yaya Toure and Fernandinho look on following their defeat to rivals Manchester United . Zabaleta said: 'It is time to analyse what we are doing wrong and try to improve for the next few games. There are still 18 points to play for and we must be honest with ourselves and start to push hard, play better and win games, so we can get in the top four. 'When you lose those games it is always really hard, but that is football sometimes. Football is about momentum. 'It seems you lose confidence when you cannot get results and it was a really tough afternoon.' City were chasing a record fifth successive derby win and the occasion initially seemed to rouse them from their recent troubles as they made a blistering start. Sergio Aguero was the rare highlight in an otherwise dismal Manchester City performance at Old Trafford . Aguero scored twice, but he had very little to cheer about as Manchester City left the Eitihad empty handed . Their movement and energy was superb and they claimed a well-worked opening goal through Sergio Aguero after just eight minutes. But that was as good as it got as United equalised through the excellent Ashley Young and then took complete control. Further goals from the impressive Marouane Fellaini, Juan Mata and Chris Smalling secured a convincing win before Aguero's 100th City goal came as a late consolation. 'It seems we lost confidence and were nervous,' said Zabaleta. 'Then it was hard for the team to react and we conceded the second goal. Manchester City's manager Manuel Pellegrini issues instructions as his side lose to their rivals . All of United's outfield players congratulate celebrate as they score in the derby at Old Trafford on Sunday . 'In the second half we didn't create many chances and when United scored the third goal the game was over.' Winger Jesus Navas was at a loss to explain City's failure to impose themselves after United pulled back level. The Spaniard said: 'I don't really know (what happened). They scored the equaliser and they were back in the game. We started strong but it wasn't our day and we need to focus on the upcoming games. It's Champions League (qualification at stake) so we have to fight until the end to be in the top four.' Juan Mata once again showed his value to the side and pointed the way with a display full of energy and poise .
Current holders Manchester City have capitulated in this season's title race .
Derby defeat to Manchester United leaves them 12 points adrift of Chelsea .
Manuel Pellegrini's side have dropped to fourth behind United and Arsenal .
Southampton sit in fifth place five points behind Manchester City .
READ: Pellegrini's job on the line as Patrick Vieira waits in the wings .