As a dream symbol, the cocoon denotes an individual who does not leave his protecting 'shell' because he is afraid of the outside, potentially dangerous, world. He is an introvert person who lives only on the inside and continually feels the need to receive protection, unconditioned love and attention. He has isolated himself from society and leads his life as an island which is separated from other land regions by the greatness of sea or ocean.
But the cocoon may also stand for a womb and consequently for an imminent birth. The birth may be real - waiting for a baby - or metaphorical - the 'birth' of new feelings, ideas, thoughts, new relationships, undertaking of new businesses etc.