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Instructions
Avoid this quest until you are capable of creating five unions with six party leaders. Your ability to create unions will expand as you travel through the game's main story, and the Ancient Dragon is not a necessary fight.
Create three unions and assign two party leaders to each union. This setup requires having access to six party leaders total. You can setup your unions by pausing the game and accessing the Union Board. From there you can assign different party members to each union. It is best to create one union that is strong with physical attacks, one with powerful magic damage and one with healing and buffing abilities.
Keep your party's health above 70% at all times. The Ancient Dragon possesses a nasty breath attack that can kill your entire party if you do not watch your health.
Select "Standby" with all of your unions except one. The first person to attack will usually be deadlocked, a stasis ailment that prevents attacks. You will want someone besides you to be saddled with this curse so that you can do damage and manage heals.
Use your strongest attacks once a party member has been deadlocked, and continue to use them as often as possible. Focus your healing union on keeping your group refreshed and use only the most powerful abilities from your physical and magic damage dealers. With each additional turn, the Ancient Dragon gains an extra attack. The longer this battle lasts, the smaller your chances of success