Watford head coach Javi Gracia has confirmed he will sign a new contract next week.

The Spaniard replaced Marco Silva in January and guided the Hornets to Premier League safety, before opening the new campaign with five straight wins in all competitions.

Speaking at a press conference ahead of Saturday's match against Liverpool, in a video on the Watford website, Gracia said: "We reached an agreement for the next years. I haven't signed it yet, but I (will) do next week.

"I am happy because it is good for me and the club as well, then we will see."

Former Malaga and Rubin Kazan boss Gracia has settled well at Vicarage Road, with the squad producing some positive performances again before the international break.

Watford will resume the Premier League in seventh place, and host title-chasers Liverpool on Saturday.

"As a coach you always depend on the results, but at this moment I can say I am proud to be part of this project, not only for one year, but for a long time," Gracia said.

"It is good for me, I feel happy here, my technical staff as well. We try with our job to help improve the team."

Gracia added: "This stability is good for the players. Now we need to keep working hard because it is the only way we can keep this good moment going."

On Thursday, Watford confirmed Venezuela forward Adalberto Penaranda had signed a new five-year contract after receiving his work permit, and would now be available for selection.

The 21-year-old has only played one competitive match since January, which was an international friendly against the United Arab Emirates last month.

Gracia said: "I am sure it was very tough for him, but he's a good professional. He always had a good behaviour, waiting for this moment.

"I think he needs time. He will train hard in the next weeks to be in the best condition.

"I think he is very good player for us. He can play different positions. He is a striker, but he can help us in different positions as well.

"He's a good striker, a young player, with a brilliant future and he has a good presence."

Penaranda, though, will have to earn his chance,

"At this moment, it doesn't just depend on him or on me. It depends on other players," Gracia said.

"At this moment, other strikers are playing really well and it depends on many circumstances. It's good news for us to have another good option."

Etienne Capoue returns from suspension to come into contention, while defender Sebastian Prodl has also been training again following his leg problem.

Tom Cleverley is stepping up his rehabilitation after a combination of hamstring and Achilles trouble, along with defender Daryl Janmaat, out since September because of a knee injury