So I'm looking at using a Malamar with contrary in my team and several possible strategies for it. After searching for a while I could not come up with conclusive evidence one way or another as to how Psych Up works in conjunction with the ability Contrary. If for example my opponent boosts defence and then Malamar uses Psych Up, will Malamar receive a boost or drop in defence?
Psych Up will copy the target's stat changes with no interference from Contrary.
Smogon's page on Contrary notes that similar moves like Haze, Heart Swap, Guard Swap, and Power Swap are not affected by contrary. All these moves, like Psych Up, set the user's stat changes to that of the target, rather than individually increasing (or decreasing) the stats.
Bulbapedia's Talk page on Contrary makes note of Contrary's non-interaction with the stat changes obtained through Psych Up.