The former forward says they must repeat their performances of recent weeks consistently if they are to win the title.
The Gunners ran out 3-0 winners at Vicarage Road, putting in another impressive display to follow their 3-0 win over Manchester United before the international break.
Arsene Wenger’s side had been heavily backed to be title challengers this season following a strong finale to their last campaign, and their current run of form has got people thinking this season could be a successful one for them.
Henry though, says they must maintain their current form for 15 or 20 games for them to be serious title contenders.
"They are in the mix for me.. Today was a massive response knowing everybody had won,” he told Sky Sports.
“Everybody was waiting to see if they were going to back up the win against United. Can they do it and maintain it for more than 15, maybe 20 games? That's what we want to see.”
The Gunners were particularly impressive against the Hornets as the newly promoted side were more than competitive for most of the game.
Wenger’s side eventually had too much class though, as they hit the newly promoted side on the counter attack to get Alexis Sanchez in to score, before taking a firm grip of the game later on to secure the victory.
And Henry says that they must play like they have in recent weeks all of the time, but he certainly thinks they can win the title this season.
"They have to play like that all the time and win games like that sometimes where for an hour they struggle and then come out on top.
“Can they repeat that against United again, or the likes of City and Chelsea? Everybody can dream. If you love Arsenal I think they can win the title this season."