
Here I've added the reflection of the taillight housing on the fender:

And added a bit of white:

In order for you to get a better idea of what I'm doing, I'll turn "off" the photo layer. Here you can see how I used the eraser to soften the edge of the chrome taillight housing reflection. I also moved the reflection layer down below the taillight base layer. You can see how the taillight base now covers the irregular top edge of the blue reflection (layers in PS can be arranged in any order... you can put any layer above or below any other layer):

The taillight continues to be built piece by piece, going back to my photo as the reference:
























