The world championship silver medallist will take on British pace-setter Greg Rutherford at the world challenge meeting in the Spanish capital, having jumped competitively just twice this year.
"I am hoping to bump my distance up a bit there," Watt told Sydney's Daily Telegraph.
"I think I am definitely in the shape to jump a season-best, so I can jump up the rankings. No one has dropped a bomb yet, as they say, so it will be interesting to see if anyone does anything crazy before we get to London."
Rutherford and Russian teenager Sergey Morgunov have both jumped 8.35 metres to set the pace in the Olympic season, while Watt's best jump in competition was the 8.21m he managed in the Gold Coast in May.
Watt, who won silver despite carrying an Achilles problem at the world championships last year, pulled out of a street meeting in Stuttgart last week because of the slippery conditions.
His only other competitive jump this year was the 8.16m he managed to win the Diamond League meeting in New York last month - still well below the personal best (PB) of 8.54m he jumped in Stockholm last year.
"With everyone's trials at different times of the year, there hasn't been a lot of head-to-head competition," Watt added.
"I have done a few PBs in training and (my coach) is pretty pleased with how things are going. I am pretty excited to head off this weekend given I missed last weekend's competition."
Four-times world champion and Athens Olympic champion Dwight Phillips was forced to pull out of last month's US trials after having surgery on an Achilles injury, making the long jump competition in London even less predictable than it already was.
Watt is convinced he is building towards the sort of form which saw him secure four of the five longest jumps of 2011 before injury laid him low.
"My strength in the weights room has improved, my short-approach jumping is better than it was last year, and I just need to get used to running at speed and hitting the launch pad," Watt added.
"I don't do full run-ups in training and the only way I can practice jumping at speed is with more competitions.
"What I do know is I don't want to do what I did last year - have a massive jump in the middle of the year, and then not jump as well at the major meet that matters."
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