This depends on the opponents; do they resist psychic or ghost or is it effective? If I remember correct, on a purely neutral base Confusion was a wee little better then Psycho Cut. But in praxis, you either field Mewtwo against a pokemon weak to Shadow Ball, or in PvP you want fast charge attacks to get rid of the opponent's shields. Thus Psycho Cut.
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I have a strong Mewtwo with Confusion + Shadow Ball. I was comparing Confusion and Psycho Cut and I was trying to decide whether to TM Confusion or not. Confusion has a higher DPS than Psycho Cut, but Psycho cut has more energy per second, which allows me to charge Shadow Ball faster. I have also heard that Psycho Cut is easier to dodge with.
I think the question I'm trying to get at is would I ultimately do more damage in total with Psycho Cut or Confusion as my Fast TM paired with Shadow Ball?
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I had this debate with myself also, I decided to switch to Psycho Cut because of these reasons:
1. In PvP it charges Shadow Ball quickly meaning you can make your opponent use their shields. Also, Pokemon such as Machamp can be hit hard with Shadow Ball even though they aren't weak to ghost moves.
2. In raids you are able to dodge way more easier than with Confusion and avoid certain situations that will most likely faint your MewTwo.
3. You can get MewTwo a second charge move such as Psychic if you are in a situation that requires psychic type coverage (it takes 100 MewTwo candies and 100,000 stardust though).
I noticed an increase in damage just because I can use Shadow Ball so much and charge it so quickly. If you however can't use a charge move, than Confusion will do much more damage than Psycho Cut. Let's say you battle with someone, and your MewTwo faints after you tried to use Shadow Ball 2 times and they blocked it. You did more damage overall with Confusion than if you would've done with Psycho Cut. But the risk involved is low, if they bring Tyranitar/Houndoom/Any other dark type I would suggest switching to Machamp or Togekiss or whatever is strong against dark types (you can use Focus Blast if you have it along with Shadow Ball but they would probably block it). Make sure to power up your MewTwo so it won't faint quickly.
Psycho cut, on a ghost offense specialist because of the effectiveness change, psychocut's higher EPS makes it better than confusion almost every time. The only time confusion wins is against pokemon weak to both ghost and psychic, which isnt often.
It's also better to have psycho cut because you can dodge a lot easier and in PvP, it charges up moves just so freaking fast.
TL;DR, not much reason to keep confusion, psycho cut's better
The rule of thumb used to be that Psycho Cut was better when the opponent resisted psychic-type attacks, Confusion was superior when the opponent was weak to psychic, and when psychic was neutral the two could trade places depending on the opponent.
After the effectiveness rebalance, Psycho Cut is better in those neutral matchups. It gains energy faster and the extra damage from the more frequent charge moves is more than the extra damage Confusion does compared to Psycho Cut. The only cases Confusion still comes ahead is when the opponent is weak to psychic attacks as well, i.e. Gengar.
In PvP it's no contest, Psycho Cut is the way to go. Higher EPT means faster charge attacks, which means you'll bust their shields faster.
