The Blues' 2-1 victory over Arsenal at Stamford Bridge on Sunday left them trailing leaders Manchester United by 11 points and second place City by six with 15 games remaining.
Even interim-manager Rafael Benitez has accepted seizing City's crown is highly unlikely, but Cahill insists they must be ready to pounce on any slip up by their rivals.
"We are looking up, not down, and want to try and chase first and second spots. Yes we are looking at the Manchester clubs," the England defender said.
"It has been frustrating because there have been many times this season where we have nearly got ourselves back involved, only to let it slip.
"But we are more than capable of putting a run together and winning nine out of 10 games. That's what we need to aim for and see where it takes us.
"We have got to make sure we are in one of the spots for the Champions League.
"We also have the cup competitions and we want to go as far as we possibly can in them.
"We just want to win games. A lot of teams have slipped up this season, so we need to win as many as we can."