Use iCloud Backup, it's the easiest method.
Also, use the device setup feature they introduced in iOS 11. I did it today (for my X to XS transition), it is as painless as it gets and super fast (no need to enter AppleID credentials or set up Wifi etc.). Bonus points: you can even use the setup feature without grabbing a backup (for the start from scratch crowd)!
Follow these steps and you're golden:
- Open the Settings app on your old phone, go to iCloud settings and make sure all your data toggles are turned on (Health, Messages and so on) to ensure they all get backed up and synced properly
- Unpair Apple Watch from your old phone (this is essential, it'll reset your Watch for resale and grab a backup that is stored on your phone for future use)
- Hold your old iPhone up to your new iPhone and it should show a popup card for device setup
- On your new iPhone it should ask you whether you want to restore via an iCloud backup -> it gives you several options, the most prominent one forces an iCloud backup on your old iPhone and waits for that to complete before restoring to the freshly taken backup
- Finish the new iPhone setup process (a few confirmations for a few features)
- Your iPhone will pull data from iCloud and restore / index stuff (probably a good idea to hook it up to a charger to get things done quicker -> photos indexing etc)
Now onto your Watch:
- Hold your new Watch near your iPhone and you should see a card pop up to initiate the pairing process (or open the Watch app on your iPhone if nothing seems to happen)
- Pick the most recent Watch backup (or start from scratch, health data should be securely stored in iCloud)
- Enjoy your Watch