From the Super Mario Wiki
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On use, Shulk holds the Monado in front of him, and if he is attacked, a blue aura envelops him and his attacker, and he slashes upward, negating any damage that would have been done to Shulk, and dealing increased damage in return. The move is also capable of reaching targets outside of the original attacker, and though the attack is rather slow, it freezes the attacker, making it nearly impossible for it to escape. If the Control Stick or Circle Pad is tilted forward just as Shulk is attacked, he instead dashes forward while slashing, limiting the move's range, while dealing more damage and activating faster.
While Shulk is countering, he is completely invincible to any attacks. If the move is repeatedly used (even when it does not counter an attack), the window for countering becomes shorter, but the window goes back to normal slowly if the move is not used, and instantly if Shulk is knocked out.
The move has two variants:
Dash Vision increases the range of the counterattack, and the counterattack executes faster as well. However, as a drawback, the counterattack deals less damage than normal. This move offers the longest reach of any counter move in the Super Smash Bros. series.
Power Vision increases the power of Shulk's counterattack, but the counter window can end up becoming nonexistent if the move is used excessively. Startup and ending lag are also increased.