It was important to win after six games with the way we had been playing before," said the City manager.
Manuel Pellegrini sent a warning out to the Premier League that Manchester City are ready to hit top gear in the title race after ending their away-day misery at Watford.
Yaya Toure and Sergio Aguero earned a 2-1 comeback win on Saturday as Manchester City won on the road for the first time since September 12.
Despite their travel sickness, Pellegrini's side remain just three points off leaders Arsenal.
And the Manchester City manager said: "We are returning to our form by recovering important players and once they are 100 per cent fit the team will improve every game.
"We are thinking of going game by game but when you win a game like we did here there is a lot of trust in the team.
"We never gave up. It was important to win after six games with the way we had been playing before. I've always said this team has character and will never give up.
"It was a tough game against a good team that is in a good moment. We can move on from here."
Aguero has been struggling with injuries all season but he took his tally to double figures with his late winner.
It could be our year says Hart
He will be a key player with Manchester City vying on four fronts. Pellegrini is taking it game by game - starting with Wednesday's Capital One Cup first-leg tie at Everton.
Pellegrini said: "He is a big player for us. He has just come back so he will improve with games.
"I'm so happy to be in all competitions despite all the injuries we've had. We must be thinking game by game."
Goalkeeper Joe Hart says City can wrestle the title back from Chelsea and said: "We believe it could be our year and that's what we want to make it happen.
"We can't do much about other teams and their results. We have to look after ourselves.
"This win is a big moment for us."
Watford were on course for victory after Aleksandar Kolarov headed Ben Watson's corner into his own net.
But Manchester City had other ideas as Toure and Aguero struck in quick succession to clinch the smash-and-grab win.
It was the second late defeat to hit Watford at home and manager Quique Flores said: "It's impossible to explain how we lost this match.
"I'm so sorry, so sorry, the players were amazing, so sorry for the fans. We want to win, for us it's not enough to be in the middle of the Premier League, we have a lot of reasons to be happy, but today we are sad because we want a lot more.
"They have an amazing team, they have amazing players. They have the possibility in two minutes to change the dynamic of the match.
The defensive work of the team was amazing. It was amazing against Chelsea, we concede two, it was amazing against Tottenham, we concede two, it was amazing here that we concede two."