Photoshop Elements: Blend Photos Like A Hollywood Movie Poster
Adobe Photoshop Elements Tutorials at Photoshop Essentials.com
Step 3: Add A New Blank Layer Between The Two Existing Layers
Once you've resized and/or repositioned your photos in the document the way you like them, we can begin blending them together. If we were using the full version of Photoshop, we'd be adding a layer mask at this point, but since we don't have access to layer masks in Elements, we'll work around it. The first thing we need to do is add a new blank layer between our two existing layers. To do that, with the bottom layer still selected, click on the Create A New Layer icon at the top of the Layers palette:
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Photoshop Elements add a new blank layer between the two other layers, which we can see in the Layers palette:

Step 4: Drag Out A Black to Transparent Gradient On The New Layer
Select your Gradient tool from the Tools palette, or press G to quickly access it with the keyboard shortcut:

Press D on your keyboard to quickly reset your Foreground and Background colors, so black becomes your Foreground color. Your Foreground color doesn't necessarily have to be black for this next step, but just to make sure we're on the same page and to avoid any confusion, set it to black anyway. Then, look up in the Options Bar at the top of the screen at the gradient preview area. If the gradient showing is already the black to transparent gradient, you're good to go:

If it's not showing the black to transparent gradient, click on the down-pointing arrow to the right of the gradient preview area, which will bring up the Gradient Picker. Click on the black to transparent gradient in the top row, second from the left to select it:

Technically, it's the "Foreground to transparent" gradient, not the "black to transparent" gradient. The reason it's showing black is because black is currently our Foreground color.
Click anywhere else on the screen to close out of the Gradient Picker once you've selected the gradient. Then, back in your document, with the blank layer selected, hold down your Shift key and drag out a black to transparent gradient. The area between where you start your gradient and where you stop dragging will become the transition area between the two images, just as if we were using an actual layer mask, so start where you want the transition from one image to the other to begin, which in my case is just above where the water and land meet in the beach photo, and drag upwards to the point where you want the transition to end. I want my transition to end just below the top of the beach photo, so I'm going to click just above the water line and drag straight up to that point:

When you release your mouse button, nothing will seem to have happened in your document. That's because we dragged out the gradient on the blank layer which is being hidden from view by the layer above it. If we look in the Layers palette though, we can see that the gradient has in fact been drawn on the layer:

Step 5: Group The Top Layer With The Gradient Layer
Now that we have our gradient, we can use it to blend our two images together, and all we need to do is group the gradient layer with the layer above it. To do that, click on the top layer in the Layers palette to select it, and then use the keyboard shortcut Ctrl+G to group the top layer with the gradient layer below it. If you look in the Layers palette, you'll see the top layer indent to the right, indicating that it's now grouped with the gradient layer:

And if we look at our document, the two photos are now blending together at the spot where we dragged out the gradient:
