You need to stand in between the two bloody pillar things, on any of the 'flaps' on the edges of the battlefield. However, I'm not completely sure if this is different in the PAL version or not. I remember hearing that you can stand right near Luther and dodge it on the PAL version., but I don't know if that has any credibility or not.
For a video explanation, download and watch this:
http://files.filefront.com/DodgeInsa.../fileinfo.html
At any rate, congratulations on beating the Chimera Hawks! You're doing so great, Shads! I know you can beat Luther easily once you figure out how to dodge Insanity Prelude.