Los Che have slumped down to ninth in the Primera Division after losing five of their last eight league matches and they are now a massive 23 points ofF top two Barcelona and Atletico Madrid.
The latest of those defeats, last Sunday's 3-0 reverse at Atletico, turned out to be the final game in charge for coach Miroslav Djukic, who left the club on Monday to be replaced on an interim basis by youth-team coach Nico Estevez.
Valencia managed to avoid further misery in midweek when they progressed to the last 16 of the Copa del Rey, but their 1-0 aggregate win over third-tier Gimnastic Tarragona will have done little to significantly lift the mood in the camp.
To do that would require something rather more impressive, and Canales feels Sunday's clash against star-studded Madrid could be just the thing.
The 22-year-old, who joined Valencia from Madrid in 2011, said: "We're in the situation we're in, but to play against Madrid at home, the fans have a lot of desire to win this game.
"It's a very difficult opponent, there's nothing else you need to say about Madrid, and we have to go out with humility and motivation.
"It's a perfect game to recover confidence.
"All games are different and we need to go out to win. That must be our mentality."
"If we get a good result it could be (a turning point). Beating Madrid gives you a confidence boost."
Valencia's chances of downing Madrid do not look good, however.
Madrid have won in their previous four league visits to the Mestalla and in the last six years have notched victories by 5-1, 6-3 and 5-0 scorelines in this particular fixture.
If that was not enough, Madrid will be desperate to get back on track after seeing their five-match winning streak in La Liga ended by last weekend's 2-2 draw against Osasuna.
Madrid fought back from 2-0 down in that match, but could not find a winner as they slipped five points behind Barca and Atletico in the title race.
Carlo Ancelotti's men responded to that draw with a 2-0 Copa del Rey success over Olimpic Xativa in midweek and will now be looking to end 2013 with another triumph.
Centre-back Pepe said: "We are going to go out to win in Valencia, as we do for every match. I hope we are lucky enough to get that win."
Madrid are waiting on the fitness of record signing Gareth Bale after he missed the cup match with a calf problem, while Valencia could have Oriol Romeu and Ricardo Costa available after they returned to team training on Friday following injuries.