Luffy's CoO has waned before. Shouldn't he have been able to locate Doffy with CoO? Or tell when the dragon was about to hit him with its tail? Luffy's CoO isn't that good.Wouldnt he be able to sense where it is with CoO? Not to mention if he is using CoO he can prepare for when Law cuts him.
And what can Luffy do to prepare against Law's cut? I don't see Luffy's less than 2 year Haki being as good as Vergo's, who has had it for over ten years, so it's not negating Law's powers. Luffy also can't block it. His only choice is to dodge it, and we haven't see Luffy do anything that would suggest he has the speed to.