[ksen]

What you do is parry while the tentacle are flinging around and when they go straight up in the air run to one and give it a chop. The tentacle will come down and the Watcher's head will rise above the surface long enough for you to shoot an arrow/throw an axe at its head.

Just keep doing that until it's dead.

Oh yeah, you need to stay pretty far in the water in order to reach the tentacles in time.

[Dawntreader]

Ok, thanks for the tip.