Open your chest up a bit by rolling your shoulders back and bringing your elbows to your side. This will give them a nice bend and line from bit to elbow and allow you to actually make contact with your horse's mouth but still have give and take.
Close your hands and hold them as if you were carrying two birds. Currently you're banging their heads together and they can't talk (I know weird, but that's how my coach always explained it and it just stuck). In other words, watch the piano hands.