It was the south London club's first win in seven, with the Addicks scoring twice in the last 20 minutes having slipped 2-3 behind midway through the second half.
Daniel Pudil fired the Hornets ahead on 11 before Tommie Hoban put through his own net to level matters in the 34th minute.
Charlton went ahead three minutes later through Yann Kermorgant before the hosts equalised from the spot via Almen Abdi.
Alex Geijo restored Watford's lead while Kermorgant (71) and Johnnie Jackson (78) sealed the points for the visitors.
And Powell said: "We had a tough December - three draws, three losses - after having a very good November.
"So it's a real positive result for us and a good way for us to kick off the New Year.
"It was a sensational game. Both teams played their part in what was a great game for everyone watching but I felt on the balance overall we just about deserved it.
"But they had some good chances, my keeper made a couple of good blocks, but overall we had 10 chances to their five and it was good we took four of them."