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For latkes:.
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Line colander with kitchen towel.
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Stir 1 1/2 cups onions, egg, salt, and pepper in large bowl.
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Place remaining 1/2 cup onions in processor; add potatoes.
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Blend until potatoes are very finely chopped and some of mixture is pureed; transfer to prepared colander.
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Wrap towel around potatoes, squeezing out as much liquid as possible.
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Scrape into bowl with egg mixture.
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Stir in all purpose flour and baking powder.
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Heat 4 tablespoons vegetable oil in heavy large skillet over medium-high heat.
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Drop potato mixture by scant 1/4 cupfuls into skillet; flatten each latke to 2 1/2-inch round with metal spatula.
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Reduce heat to medium.
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Cook until golden, about 4 minutes per side.
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Transfer to large rimmed baking sheet.
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Repeat, adding more oil to skillet as needed.
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DO AHEAD: Latkes can be made 2 hours ahead.
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Let stand at room temperature.
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Preheat oven to 425F Bake latkes until crisp and deep brown, about 6 minutes per side.
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For salad:.
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Whisk oil, vinegar, and dry mustard in small bowl to blend.
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Season with salt and pepper.
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Combine watercress, avocado, and salmon in large bowl.
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Toss with enough dressing to coat.
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Arrange 2 latkes on each plate.
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Mound salad alongside.