Set the Inner Glow

Now we’ll decorate the tree with the Christmas globs. Use the Ellipse Tool (U) to represent a small ellipse of the color #0375E0

Go to Layer Style > Drop Shadow

Set the Inner Shadow

Next represent a highlight on the glob’s surface, using the same Ellipse Tool (U).

Set Fill to 0% for this layer and go to Layer Style >Gradient Overlay

Gradient Editor settings:

Next combine in a group all the layers containing the Christmas glob (press CTRL button to select the appropriate layers and then hold on the left mouse’s button while dragging the selected layers on Create a new group icon on bottom part of the Layers panel). Make eight copies of this group, changing the colors for the copies’ layers (the basic color of the glob’s layer). Then select the Free Transform (T) option to place the copies exactly the same way from below:

Now we have to draw also the tree’s trunk, applying in this case the Rectangle Tool (U). Place the layer under the layers containing the Christmas tree’s layers.

Set Fill to 0% and go to Layer Style > Gradient Overlay

Gradient Editor settings:

Create a new layer and choose here the Snowflake brush of white color from Assorted Brushes set.

Set the brush settings as shown (choosing the Brushes panel (F5) on the right side of the Options bar).

Apply on the layer containing the snowflakes the next filter Filter>Blur>Gaussian blur

On the next new layer (Create new layer) we’ll apply again the Snowflake brush.

The final result!

View full size here.