Apple S8 Watch Not Preparing to update

Did you already try the troubleshooting mentioned in the related article?

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Try these steps:

1. Make sure that your Apple Watch is connecting properly to its charger. 
2. Restart your Apple Watch.
3. Restart your paired iPhone.
4. Try again to update your Apple Watch.

If the update won't start:

1. Open the Apple Watch app on your iPhone.
2. Tap General > Storage.
3. Delete the update file.
4. Try again to update your Apple Watch.

Learn what to do if you see 'Cannot Install Update' when updating Apple Watch or if your Apple Watch says you need more available storage to install a watchOS update.

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copied from: Update your Apple Watch - Apple Support

What is happening if you try to update from settings on your Apple Watch directly in stead?