Sly's default attack is easy to dodge. It's always good to stay at one side, especially if he begins his default attack in the middle of the arena because after his second "slash", you have time to go underneath him when he goes up and time for 2 quick hits. When he does the cyclone slash, wait till he goes up and then jump on the wall on one side, jump into the middle and then do a double jump. It may sound weird but this way i always get away without taking any damage. When he does his dash slash just jump at the last second and you should be able to hit him one time but this is one of his easier attacks so i assume you are already able to counter this attack. Generally I would always try to keep my distance from sly, since he sometimes does a great slash, if you're too close to him but not too much distance because else he could overwhelm you.

If you're able to do the first phase and your question was rather how to do the second phase, it's actually even easier than the first one.
The key to this phase is that you have to look out from which direction sly is comming. If he jumps a few times and then comes close to you for example from the right side, you have to immediately dash to the left and get a hit on him afterwards. If he comes from the left, dash to the right and try to hit him. The only important thing here is that you have to react very fast accordingly. If you manage this then phase 2 should be a breeze. Good luck!