Parry is an ability in Assassin's Creed: Unity (ACU)

As you see an enemy begin to attack Arno, you need to hit the prompted button.

When it comes to parrying, there are 2 levels to it: Normal and Perfect.

Normal Parry

Hitting the Parry while the foe's life bar is red: Arno will deflect the attack.

Perfect

Hitting the Parry while the foe's life bar is Gold: Arno will deflect the attack and deliver a retaliation strike.