Apple Watch flashing colors

The first (and simplest) thing to try if something isn’t working right is to restart your Apple Watch and its paired iPhone. If necessary (device not responding), try a forced restart. Both methods can be found here:

How to restart your Apple Watch - Apple Support

Restart your iPhone - Apple Support

If that doesn't help, the next steps would be to unpair and pair your watch again and restore from the backup just created. This should result in no loss of data. It deletes all temp and corrupted files and re-indexes the file system.

Unpair and erase your Apple Watch - Apple Support

Set up your Apple Watch - Apple Support

But it sounds like a hardware problem, the fastest way might be to make an appointment at the Genius Bar in an Apple Store near you. If that is not possible use online Apple Support. Either way:

Genius Bar Reservation and Apple Support Options - Apple

My watch series 4 did the exact same thing in early July. It then died and I didn’t use it for almost a month, at which point it charged normally and was usable for about 3 weeks before the same thing happened. Now it’s going in and out, one time works one time doesn’t. This is not a reset/pair-unpair issue. It seems to not be making a connection somewhere in the watch, as sometimes squeezing the sides of the watch brings the screen back on, until you let go and a few seconds later is gone again. It also gets increasingly hot when the screen lights up like this. Apple seems to think that they should charge $330 to fix this faulty product. Seeing other people having this issue, it’s simply unbelievable that Apple doesn’t stand behind their expensive watches and offer customer a solution that doesn’t cost as much as a new watch. All complains I have found are series 4 so this seems to be perhaps an issue with production in 2018.

That is likely a digitizer failure. Schedule an appointment at your Apple Store Genius Bar for evaluation and options. You will most likely either be buying an Out of Warranty replacement or a new watch at this point.

To see the cost for an Out of Warranty replacement click here --> watch Service Pricing - Apple Support

I have the exact same watch and exact same issue. Watch has not been dropped or damaged. I can’t figure out the cause of the problem either, but it seems common on threads.