Complex sentence: Nobunaga's scouts reported that Yoshimoto were resting at the narrow gorge of Dengaku-hazama, ideal for a surprise attack, and that the Imagawa army were celebrating their victories while Yoshimoto viewed the heads.
Split into simpler sentences: Nobunaga's scouts reported that Yoshimoto were resting at Dengaku-hazama which was a narrow gorge, an ideal place for a surprise attack. The scouts added that the Imagawa army were celebrating their victories while Yoshimoto viewed the heads.