Allen won the Liverpoolfc.com Man of the Match award for his display against Manchester City on Sunday.
Fellow midfielder Gerrard was also impressed.
"When you make big-money signings people expect it to take time to settle in," the LFC captain said. "You naturally give them that bit of time but it seems like Joe has cruised in and settled in really, really well.
"He is only small but he passes the ball well, he's safe in possession, he works really hard for the team.
"If he can keep performing to the level he is then I think we've found ourselves a player."
The game ended 2-2 after Carlos Tevez rounded Pepe Reina to level late on.
The Reds had twice led through Martin Skrtel and Luis Suarez and looked the most likely to clinch all three points.
Gerrard wants the performance to be a benchmark for the Reds this season.
"There are plenty of positives to take from that game," he said. "When you play so well and you only get a draw, it does feel like a defeat, but no one is down after that — it was a great reaction after the West Brom result.
"From Pepe up to Luis, everyone performed well. We're really pleased.
"If we can use that as a benchmark for our performances moving forward I think we can do really well."
Photo via Liverpoolfc.com