Whatdaya mean "I am always in denial"?
X says to Y 'You will take "A" as an insult but it is not meant to be so.' In this case X does not want to accept (denial) the truth that to say A to Y is an insult. Typical of a denial is that X labels a phenomenon 'saying A to Y is an insult' but that the labeling is incorrectly rejected as true.
In this second example X says to Y "You ask who this person in the dream can be. It is not my mother." Y recognizes a denial and assumes that X is in fact saying 'It's true that my mother came into my mind as I thought of this person, but I don't wish to let that association to count.'
The second example contains the two dimensions Freud considers to be constitutive of denial. "In a denial, one does not so much associate two images--the unknown figure in the dream and the figure of the mother--as one labels a previously unknown phenomenon.The other constitutive element of a denial is the negation of the labeling activity performed by the patient."
The content of a repressed idea can make itself conscious provided that it is simultaniously negated. "Negation is a way of taking cogniznce of what is repressed." We see here that there is a third constitutive element of denial: repression. The three constitutive elements of denial are: correctly labeling the repressed, refusal to accept the reveled truth, and the repession act itself.
"A denial is then understood as a mechanism whereby an unknown repessed penomenon makes its way into consciousness...Freud calls the negation in a denial 'the hall-mark of repression'...Labeling and correctly labeling that which is repressed are crucial aspects of the puzzle which Freud wants to study under the phenomenon called denial."
Quotes from Denial, Negation, and Forces of the Negative by Wilfried Ver Eecke