The Gunners are in fourth spot in the Premier League table following an eight-game unbeaten run under Spanish head coach Unai Emery.
Arsenal lost 2-0 to defending champions Manchester City at The Emirates in their season opener before Chelsea FC were 3-2 winners against the Gunners at Stamford Bridge.
The north London side bounced back from that disappointing start to win seven games on the bounce in the Premier League before a 2-2 draw at Crystal Palace last weekend.
Arsenal are facing stiff competition for a top-four finish, with Chelsea FC, Tottenham Hotspur and Manchester United all battling for the final two Champions League qualification spots.
Emery’s side have the firepower to compete with the top four and their return of 22 goals in 10 games is the second best haul in the Premier League so far this season behind title holders Manchester City.
Merson has been critical of Arsenal’s defending under Emery and has accused the new Gunners boss of failing to improve a clear area of weakness in the north London team.
However, the Gunners legend has conceded that Emery has put Arsenal in a position to challenge for a fourth-placed finish.
“At the start of the season, I don’t think anyone would have given them a shot of finishing in the top four, but he’s given them a chance at least, it could happen,” Merson told Sky Sports.
“He’s a good manager and he needs a couple of windows. In time he will bring in his players. They’re a long way from Manchester City, but they will be more competitive.”
Arsenal finished in fifth and sixth place in Arsene Wenger’s final two Premier League seasons at the north London.
Emery’s side haven’t faced a top-four team during their seven-game winning run to dispatch of the smaller teams in the Premier League.
However, the Gunners will undergo a stern test of their top-four credentials when Arsenal welcome second-placed Liverpool FC at The Emirates on Saturday afternoon.
The north London side have failed to beat Liverpool FC since April 2015, losing three times and drawing three times in their last six Premier League meetings.
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