How does Stella show denial, and how is she living in her own imagination?

Of the two sisters, Blanche is the sister living in denial. Stella, however, does show those same tendencies, when she refuses to believe her husband raped her sister. Stella notes;

STELLA:
I don't know if I did the right thing.
EUNICE:
What else could you do?
STELLA:
I couldn't believe her story and go on living with Stanley.

Thus, as we can see, Stella deceives herself in order to protect her marriage..... her family.