I'll be honest, I love Watchog and I think he's very underrated and underestimated, but I never would have used him competitively because of his poor stats and abilities. That is, until I tried him in Pokemon Showdown. Here's a set that's worked surprisingly well for me on Showdown for my Watchog.
Watchog @ Focus Sash
Ability: Analytic
EVs: 252 Def / 252 SpD / 4 Atk
Adamant / Jolly Nature
- Confuse Ray
- Thunder Wave
- Knock Off / Bite
- Hyper Fang
This Watchog set is a paraflinch set that also makes use of confusion to annoy and debilitate opponents, which is what Watchog does best IMO.
Confuse Ray and Thunder Wave ideally force a switch or prevent the opponent from moving. Knock Off is generally a better choice than Bite for its utility, but you can use the latter in conjunction with Thunder Wave to paraflinch opponents you otherwise can't KO. Hyper Fang is generically strong STAB that can also flinch.
Counters: Ground and Electric types. Entry hazards. Burn/Poison damage. Pokemon with Limber, Steadfast, Inner Focus, Synchronize or Own Tempo.