1.
Begin with the cape lying flat on the back with collar toward your right. You will want to neatly spread the cape fully flat and make sure from here on that you make your folds as crisp as possible to reduce that 'slept in' look that we are trying to avoid in the first place.

3.
Next fold the outer edges of the cape (where your arms would go) across the front of the cape to align parallel with the centerline. Again, attempt to make sure that every layer of cape is smooth after it is folded. You may find that the smoothest fold here lines up a bit off of the centerline.

5.
Next fold the upper 1/3 of the cape to your left over the rest. Make sure the collar is lying flat now or it won't be the next time you wear it.

7.
Finally fold the remaining rectangle up in half to make another square.

2.
Square up the shoulders by sliding a hand inside the cape and smoothing out the shoulder until the front and back material in that area lies flat against each other. Then make sure you align both the inner (long) and outer (short) edges of the cape (where the buttons and holes are) along the centerline of the back.

4.
The lower part of the inner cape is now folded in to align with the center. At this point you should have something akin to a long rectangle.  The lower 1/3 of the cape is now folded to your right over the upper part.
 

6.
Now fold the remaining square in half in the same direction you made the last fold.

8.
The cape is then neatly stored in the pouch.