does setup process for new watch wipe my old apple watch ready for resale?

No, you will need to follow the steps provided in this article to set up your watch for sale

What to do before you sell, give away, or trade in your Apple Watch, or buy one from someone else - Apple Support

Excellent!

If it goes pear shaped or you say “no”

Settings, General, Transfer or reset iphone, Erase all content & settings

will clear it out ready for sale.

When iphone Quick Start ends the process asks if you want to wipe the old phone ready for sale