He's not really reading mnds, rather, he's good at detecting patterns and calculating probabilities. He probably isn't even conscious he's doing it himself.
See, he wiped the floor with individuals who used repetitive tactics, but his matches against more varied opponents were much longer. He also put his characters in positions (in terms of area) that makes him more likely to succeed in connecting his attacks.
Really, to fight this guy, you have to be able to vary. At one point, you must realize "He's on to me, time to change pace". Like a lot of Falco players didn't want to stop short-hop-lasering even when it became fairly futile.