To find the knife needed to complete the ritual it’s time to head off to the Ancestor Glade (located east of Falkreath ). Once you’re inside, hop onto the rock (over to the other side of the fallen tree trunk) and follow the path until you reach the statue with the knife.
Once you’ve grabbed it, turn around; use it on the tree behind you and then this bark extract will aid you in attracting the seven moth swarms needed to perform the next step. Simply walk around the area to find all seven swarms with little trouble.
With all seven swarms in tow; stand in the column of light, read the Elder Scroll (Blood) and once your visions have finished, speak to Serena and tell her about the cave. After the conversation is over, you’ll not only complete the quest, but you’ll encounter either Vampires or Dawnguards (depending on which side you’re fighting for now). Kill them and then head outside so you can begin the next main quest ‘Touching the Sky’.