Step 1:

Open the Water Bubbles texture by Jaskier in Adobe Photoshop.

Click twice on the Background to turn it into a normal layer and name it Water Bubbles Texture.

Create a new layer, fill it with black color and place below Water Bubbles Texture layer. Name the new layer Black Background.

Above the Black Background layer create a new layer and fill it with Yellow, Violet, Orange, Blue radial gradient from the gradient editor. Draw your radial gradient from the upper left to the bottom right hand side of the image. Name this new layer Gradient and your document should look like this:

Set the Opacity of your Gradient layer to 9% and keep its Blend Mode to Normal. Now you will have on your screen the following image:

Go to your Water Bubbles Texture layer, set its Blend Mode to Overlay and slightly lower Opacity to 93%. It would be better to group these three layers. Select them and go to Layer, Group Layers, then right mouse click on Group 1 which appears in your Layers palette and in Group Properties box give a name Background. Now your screen must be like this:

Let us enrich our background with some nice glittering planets (for the purpose I copied the Water Bubbles Texture layer, set the Blend Mode of the duplicated layer back to Normal and placed it above the previously created Background group).

Now using Ellipse Tool, select a part of the Water Bubbles and by means of Ctrl+J create a new layer with the selected circle. Use Edit, Free Transform to resize your future planet. Name this layer Planet 1.
Now press Ctrl and click your Planet 1 layer thumbnail to load a selection and go to Filter, Distort, Spherize, set the Amount option to 100%. Repeat this filter by Ctrl+F:

In this step just move your Planet 1 to the upper right side of the image. It will be the planet caused the contemplation of our Dreamer:

Now it is time to make Planet 1 more attractive. Firstly duplicate the layer, set the blend mode of Planet 1 copy to Color Burn and lower the Opacity to about 40%. This will make the planet to look a bit more expressive but as you can see it is still dully colored:

Select your Planet 1 layer and with Ctrl+left mouse click on its layer thumbnail load a selection. Create a new layer above Planet 1 copy and fill the selection with gradient. I have chosen the same gradient used for the background coloring- Yellow, Violet, Orange, Blue radial gradient. Name the layer Planet Gradient and set its Blend Mode to Soft Light. Now the planet looks more colorful but still has no volume:

Create a new layer above the Planet Gradient layer and name it Gradient 2. If your planet is not selected, reload the selection again, and fill it in Gradient 2 layer with Black to transparent gradient. Lower the layer opacity and with Soft brush Eraser Tool (Opacity about 30%) erase a part of the gradient:

In this step I grouped all planet layers and named the folder Planet 1. After that copied this Planet group, then merged it and set the Blend Mode of this merged layer to Color Dodge. Copied the layer a few times and on each of the planet layers applied Edit, Free transform. Look at the following image to see the arrangement and blend modes of all planets.

To complete the planets work, I gathered all planets layers plus Planet 1 group into a new group named Planets. And my planets and their layers looked like this:

This step is very easy. You only need to select with Elliptical Marquee Tool a big ellipse of Water Bubbles texture, then go to Edit, Transform, Warp and start shaping (warping) the head of our Dreamer. Name the layer Head and place it above Planets layers group.

Use Polygonal Lasso Tool and Eraser to continue with head shaping. During this step you can clean the parts of the already warped ellipse where the lips and eyes will be placed. For erasing the parts I used selection with Polygonal Lasso Tool then hit Delete key:

Select a part of the original Water Bubbles texture with Rectangular Marquee Tool and use Edit, Transform, Warp, this time to shape the nose. Use also Eraser Tool with soft brush to clean the unnecessary parts of nose shape. Name this layer Nose. It must be placed above Head layer:

This is the step to shape the neck and eyebrows.

Choose the most expressive bubble from the texture, 'smash' it with Edit, Free Transform, then apply Arch type warp and set Bend to 30%. You already have the eyebrow.

Use the same bubble to shape the lip, again applying the almighty warp.
Also in this step, choose the 'œrugged' part of our Water Bubbles texture, and again warp it to shape the neck.

Choose one less expressive bubble to warp the eyelids. Place the eyelids layers into Head group. At the bottom of all eye layers create a small white ellipse to complete the eye and darken a part of it using Burn Tool.
You can also use the same bubble for shaping the ear.

There is one more detail about the ear. I achieved its relief selecting parts of the ear shape with Polygonal lasso, the applied Bevel and Emboss to each of the selected parts and used Blur Tool to smooth the borders of each shape.

After that incorporated all ear's parts into one group named Ear and placed it within Dreamer group.

I copied the Head layer and applied to it Bevel and Emboss of Purple color also used Burn tool to add slight shadows. Softened the edges of the image with Blur Tool.
Now the picture on your screen should resemble the image given to this step. It is time to go to Image, Save As and name your new .psd file- Displacement Map.psd. We'll need this Displacement Map file later in Step 36.

Select with Ellipse Tool a part of the texture, then having the ellipse, go to Edit, Transform, Warp and choose Flag for warp type. On this flag shape apply Bevel and Emboss layer style. For your convenience, create a new layer below the flag shape and merge both layers to apply the layer style. Now comes the interesting part.

Copy your Flag Shape Layer, go to Edit, Free Transform and slightly rotate and scale down the copied shape. I have given the Free Transform settings in the image following this step. Press Enter key to apply the transformation, then hold down CTRL+ALT+SHIFT and hit T key as many times as you like to multiply the copied flag shape.

When you are finished, merge all flag shaped layers to prepare the collar of our Dreamer. Rename the layer Collar. I added again Bevel and Emboss layer style to increase the blue nuance.

Copy the Collar layer from the previous step, merge the copied layer with the original Collar layer and using Edit, Free Transform and Edit, Transform, Warp where necessary, adjust the shape to fit to the Dreamer's neck. As you can see from the picture, I have applied more Bevel and Emboss to the already shaped color to give it blue opal shine.

Collar layers are also in one group named Collar and placed above Dreamer group of layers.

Look at the image I have submitted referring to this step. Select with Elliptical Marquee Tool three bubbles form the Dreamer's head and apply on each of them Blending Options, Bevel and Emboss, set its

Size to 250 px;
Soften:16 px;
Highlight color is # 6990a6;
Shadow Mode color is: # 162a4b
with Opacity 56%.

Bevel and emboss settings are given in the screenshot.

Now select one of the bubbles we separated on a new layer in Step 17. Duplicate the chosen bubble layer, go to Edit, Free Transform, slightly move to duplicated layer to the right and rotate it, also decrease its size, press Enter to apply the transformation, then hold down CTRL+ALT+SHIFT and start hitting T key till you have a 'œhorn' shape.

If you wish the horns to be straight, just don't rotate the duplicated layer when applying Free Transform. I did not rotate the smallest bubble duplicate when transforming it and you can see from this step's image that the small horn is not bent. Merge each horn's layers and combine them in one group named Horns and placed between Collar and Dreamer groups of layers.

This step is very easy. You have only to copy two of Dreamer’s horns, then move their layers below Head layer and using Free Transform and Warp change only a bit their size and shape and place them to fit the head. You can merge both layers and name them back horns.
Look at the following image how I have arranged my Layers Palette.

This step is also very easy. Only select some random parts of Water Bubbles Texture and on each of them apply Filter, Blur, Motion Blur- Angle: 0; Distance: 999. Scale with Free Transform tool to make the smoke lines to be. Look at the image given concerning this step.

Continue processing the Smoke Lines. Now go to Edit, Transform, Warp and give each of them a nice curved shape. Three of the Smoke Lines layers are in one group named Upper Smoke and placed above Collar group of layers. The long Smoke Line going from the planet and behind Dreamer’s head is placed on a separate layer above the Background group of layers and named Back Smoke.
Change Opacity and Blend Mode of each Smoke Line layer for more effect. Have a look at the following picture as I have given there Opacity and Blend Mode of each Smoke line layer.

Above the Upper Smoke Group of layers create a new layer named Crosshatch Brush (placed above Upper Smoke group of layers) and choose the respective brush to add a few stars to your image. I have chosen Crosshatch default brush, then lowered its layer Opacity and set Blend Mode to Lighten.

Now set your Foreground Color to # a9d0d2 and Background Color to # 661d1d. Create a new layer placed above Back Smoke layer and go to Filter, Render, Clouds. Press Ctrl+F to apply the filter once more. Blend Mode of Render_Clouds layer- Soft Light.

Take Ellipse Tool, select a tiny part of dreamer’s face, with Ctrl+J separate this part on a new layer and set its Blend Mode to Luminosity. For your convenience name the layer Side Bones.

Right mouse click on Side Bones layer, choose Blending Options, Bevel and Emboss, Size 10 px, Highlight color: # a3eefc, anything else is default. Now you must have this:

Now copy the Side Bone layer, and with the duplicated layer selected go to Edit, Free Transform, slightly enlarge the side bone and nudge it in upper and left direction by means of Upper and Left arrow key on your keyboard. Then press CTRL+ALT+SHIFT and hit T key a few times till you have the following:

Now merge all duplicated Side Bone layers except the original one and set the Blend Mode of Side Bone Merged (I named the layer like this) to Soft Light.

Copy the Side Bone Merged Layer and set Blend Mode of the copied one to Vivid Light, also lower the Opacity to 60-62%. The image will look like this:

Duplicate the layer from the previous step and set its Blend Mode to Hard Light. Place this layer below the other two Side Bone layers and above Side Bone Original Layer.

Gather all Side Bones layers in one group placed between Dreamer and Side Bones groups of layers.
Our Dreamer is almost ready now. You must leave it at this Step if you don’t like more effects. The image looks like this:

Now take Shape Tool from your Tool Bar, set its mode to Shape layers then choose Grass 2 shape from Custom Shape Picker. Draw the grass shape to cover part of the Dreamer’s neck. For your convenience, I have lowered the opacity of the object and have put it on a white background so that everything in this steps to be seen clearly. The color of the shape does not matter. Not necessary to use mine.

Rasterize Grass 2 shape layer and duplicate it. As you can see I have warped and scaled it, then moved to the front part of the neck.
Take again Shape tool but choose this time Grass 3 shape from Custom Shape Picker. Draw the shape to cover larger part of the neck and rasterize this Grass 3 layer.

Continue adding other shapes. I chose Ornament 1. Using Free Transform and Warp make the ornaments fit to the Dreamer’s face and neck. No problem if some of the shapes go out of the object’s bounds. Later we’ll apply clipping masks.

Now on EACH ONE of the shapes from Step 31-35 apply displacement map. Select the respective shape and go to Filter, Distort, Displace. Set Horizontal and Vertical scale to 15, click OK and in the Choose a Displacement Map box select your Displacement Map.psd file which you previously saved in Step 16. Now the shapes should look a bit uneven.

Now copy Dreamer layer as many times as many shapes you have. Click on the line between each shape and Dreamer image layer while holding down Alt key to apply Clipping mask.

At the bottom of Dreamer group of layers should be the original layer with Opacity 90% and Dreamer copy 1 layer (Opacity 50%) on which Bevel and Emboss layer effect is applied -

Style: Inner Bevel;
Technique: Smooth;
Depth: 100%;
Direction: Down;
Size: 79 px;
Soften: 0 px;
Angle: 30 degrees;
Use Global Light is ticked;
Altitude 30 degrees;
Gloss Contour: Linear;
Anti-Aliased is not ticked;
Highlight Mode: Screen;
Highlight Color: # 050e35;
Opacity: 12%;
Shadow Mode: Multiply;
Shadow Color: # 3c70a6;
Opacity: 17%.

As you can see everything from Step 32 to this Step 36 was implemented within Dreamer group of layers.

Above all layers I have added Gradient Map adjustments layer (Dark Spectrum gradient) of 10% Opacity and Blend Mode Overlay.

Now it is how my image looks after everything upper described was implemented.