A pencil tree is a narrow, cone-shaped tree that's perfect for small spaces. Here are some tips for decorating a pencil tree for Christmas: 1. Start by adding a tree topper. A star or angel is a traditional choice, but you can also get creative with something like a snowflake or a bird's nest. 2. Next, add some lights. Pencil trees are small, so you won't need as many lights as you would for a full-sized tree. Start by wrapping the lights around the trunk and then spiraling them up the tree. 3. Add some ornaments. Since pencil trees are small