City trail 3-2 from the first leg and must now find a way to progress at the Santiago Bernabeu on Wednesday.
Guardiola acknowledged the challenge ahead, as his side struggle for consistency in a frustrating campaign.
Spaniard Guardiola said: "There are many, many games we have not been playing the level we wanted and, in the end, we lost.
"Then it was not just the three points but how it was affecting our minds for the next game. It happened a lot of times.
"Of course this victory helps us but, listen, the margin to win at the Bernabeu from that position, everybody knows, the percentage to go through, we arrive at one per cent. Or I don't know what, but it will be minimal.
"But as much as you have a chance we will try, that's for sure. We are going like we always have done but, this season, the reality is we have been miles away. We have been really, really poor in performances and results this season.
"For one game, Saturday, we played really good but it's not going to change the opinion, the reality. But, of course, it's better to travel to Madrid with this result."