Many years later and still having the same issue! Took me 3 days to figure out how to connect my old apple watch to my new iphone 14.
This is what finally worked for me:
have both phone and watch charging
reset apple watch
delete watch app on phone as well as old back up versions (deleted via storage in settings)
updated iphone to latest IOS
paired manually with code (not image)
Only then did it work for me and even then it took 5 hours to update and connect where i didn't touch either device. Good luck!