Once the pre-requisites are provided (i.e. up to Step 3), we can start to work on the dream.
The first mistake people make is that they assume that dreams are about their outside world. This is incorrect. Dreams are about inner dynamics. For instance, dreaming about a family member does not mean it’s about said family member, rather there is an inner dynamic that is best represented by that family member. Said differently, dreams inform us about ourselves, not about others. (Note: in some exceptional circumstances, this rule can be incorrect, for instance when a family member dies).
Looking at the dream, we will usually observe a narrative arc in three-part: a beginning (introduction of the settings and characters), the middle part (drama and tensions) and the ending (possible resolution).
The first sentence of a dream generally gives the setting and introduces the major characters. […] Once you have that translation, you have naturally to think about how it applies to the moment of the dream and to the dreamer’s life.
After you’ve looked at the exposition in this way, you then go on to the naming of the problem.
Now the ending of a dream, the lysis, is always what the dream is driving at: a solution or a catastrophe. […] I always pay particular attention to the last sentence of the dream, which gives the unconscious solution if there is one.
Fraser Boa and Marie-Louise von Franz, The Way of the Dream: Conversations on Jungian Dream Interpretation With Marie-Louise Von Franz, page 34
With this overarching structure of narrative and inner dynamics, we can then approach the dream scene by scene, each scene being about an inner dynamic of the conscious attitude seen from the unconscious.
Describing these dynamics can be done with Jungian vocabulary (which is an essential compass for the analyst), however this might obscure the meaning of the dream for people unfamiliar with these terms. To avoid losing the emotional core of a dream, we can approach these dynamics by feeling into them. James Hillman makes this point magnificently here.
This is how I do it: when I read a dream, I try to imagine myself in the dream, witnessing the symbols and their transformations, asking myself: “Why is the unconscious showing this and not something else? How does it feel to be in the presence of this symbol? What does it mean for the unconscious to show this?”. Emotions and impressions guide the analysis, not the intellect.
Thankfully, another way of guiding our understanding is to rely on body signals: shivers, gut instincts, sudden breaths, etc… are all ways of orienting oneself and avoiding over-intellectualization.