You got the controls right. The only trick to parrying is holding direction away from the object you are deflecting, and it won't work on objects directly below you. It has a lot of range (scales with speed too), and the timing has so much input buffer that you can spam both directions.
If by dive you mean the bullet form, it works with any momentum, but shooting up will trigger it really quickly - good for escape, ruining your progress and bullying the boss.
Holy cow, that's a lot of playtime considering how short this game is. Must have been several levels full of brass. Thanks for playing!