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Double-click on the Layer titled Background and accept the
default name of Layer 0. This makes it into a floating layer.
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With our image open in Photoshop,
select the Magic Wand Tool. Change the Tolerance settings to
about 32.
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Click on an area of sky - you should see a selection of marching
ants.
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From the Selection menu choose the Similar command. This will
select anything that is similar to the last colour we used the
Magic Wand Tool.
If you now have selections anywhere else apart from the sky,
remove them by using the Lasso Tool (press "L"). Hold down the
Alt key while drawing around the area you want to remove the
mask from.
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When only the sky is selected, choose the Feather command from
the Select menu and enter a value of 1. Press the Delete key
to remove the sky. You should now be able to see the chequered
background of the canvas.
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Open a file that contains the sky image you want to use - click
and drag it onto the original file.
Move the sky layer down one so it is below the layer titled
"Layer 0". You should now have the sky set behind the foreground
layer.
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Once you have the sky in the position you want after moving
it and rescaling it, select the Eraser tool and choose a small
soft-edge brush.
Remove any unwanted areas on the Layer 0.
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Finally, choose the Defringe option
from the Layer... Matting Menu. This will tidy up the edges
a little.