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Deals damage and has a 20% chance to confuse the target. Damage is boosted to 1.2x by the ability Iron Fist.
Even though Dizzy Punch seems to be a good move on its own, and there is a fairly decent chance for its added effect to occur, it's not used on the competitive scene, because it's outclassed in terms of raw damage output by other more powerful Normal-type moves, namely Return and Frustration. There is no recommended situation where this move would be a better option.
Return is a more powerful Normal-type alternative.
Double-Edge is an even more powerful Normal-type alternative; however, it inflicts recoil damage after each use.