Exhale when your muscles contract, and inhale when they lengthen as they return to the starting position.
It is understandable why this is so confusing, because our muscles move our limbs in so many planes and directions.
By putting together the breathing control with a calm mind allows you to focus your physical energy into a more effective technique.
The simplest way to demonstrate this is to try hitting a punching bag as you breathe in and compare the power of this to that of doing the same exercise as you breathe out.
The strike on the breath out is much stronger. By using your mind to imagine that all of your energy is being transmitted into your striking point allows you to strike more effectively than if you were just swinging away blindly.
Breathing can greatly assist muscular tension, provide a solid stance and explosive action. Explosive movement in all martial arts is in fact always accompanied with a strong exhale.
This assists muscle contraction thus boosting explosiveness and speed.
Dr Paul Lam writes
As in all Qigong, correct breathing is of vital importance. Breathing in while drawing and breathing out while shooting.
Chen Jin (one of the most famous Chen style master whose writing was responsible for making Chen style known outside the Chen village) said when opening your are solid outside and soft inside and when closing you should be soft outside and solid inside.
For example, in the Chen style 36 Form, Form 34 Forward Cannon Punch, bringing both fists backward and downward to near the left hip (see picture one) is drawing the bow, then the punching with both fists (picture two) is shooting the arrow.
Breathe in while storing energy, your outside is solid and inside soft; then breathes out when punching out with the outside soft (and elastic) and inside solid (Qi sinks to the Dan Tian).
When breathing in Qi moves upwards and when breathing out Qi sinks downward.
Dr Paul Lam MD