Always waveshine when the shine is guaranteed to hit. Like if you got a clean opening (dair punish on marth's fsmash for example) then you should almost always waveshine. When you are approaching on someone's shield, use your judgment. If they have been shield grabbing or attempting an oos option that has been getting beaten by shine and you think they will do it again, waveshine. Otherwise, shine into short hop to continue pressure, double shine or shine grab.
Also, you should always waveshine towards your opponent when you think the shine will hit. If you do an aerial and cross them up, you will have to waveshine backwards to put yourself in the best position to follow up. The reason for waveshining is that DI-ing shine away from Falco sends opponents too far away to follow up if he doesn't waveshine, but you can follow up on a shine that your opponent DI'd in even if you waveshine towards them.
That's a very simplified version of when to waveshine and obviously sometimes there are advantages to waveshining away on shield, and sometimes waveshining in on shield will not be punished if your opponent is scared of double shine or shine grab, but it's a good starting point.