Any piston (#1 in this case) is at TDC (top dead center) once in each
revolution, the exhaust stroke or compression stroke. You are trying to
establish TDC for the compression stroke.
As others have said, with the spark plug out, checking for air coming out
of the spark plug hole will verify that the cylinder is indeed on the way up
to TDC on the compression stroke, The air won't come out of spark plug
hole on the exhaust stroke since, if the cam is in time, the exhaust valve
will be open and no pressure will be generated to force air out of the spark
plug hole.
Now set the alignment of the damper mark with the indicator tap on the
front of the timing chain cover.
To make up for any play in the system the piston stop method is the
most accurate. Using the piston stop method you must be sure that the
piston is on the up stroke for compression and not the exhaust stroke so
checking first for air coming out of the spark plug hole will insure that the
piston is on the compression stroke and using the piston stop tool will
verify the piston is indeed at TDC for the compression stroke.