Choose the Interactive Layout option in the main Photomerge dialog box to open the Photomerge interactive dialog box, where you can manually rearrange your source images to create a panorama.
With Reposition Only and Snap to Image selected, Photoshop will preserve alignment at overlapping image areas, and apply blending to even out differences of exposure between the images. In Perspective mode, Photoshop selects one of the source images to supply a vanishing point, and stretches or skews the other images to create a wraparound effect. Use the Vanishing Point tool to change the vanishing point and reorient the perspective.
After arranging the composition, click OK to generate the panorama as a new Photoshop file. The composition then opens in Photoshop.
Click Save Composition As to save the composition and open it again at a later time.

For a video about using Photomerge, see www.adobe.com/go/vid0013.
Navigate in the dialog box
Do one of the following:
Select the Hand tool and drag in the work area to move the view.
Drag the view box or the scroll bars in the Navigator thumbnail. The view box represents the boundaries of the work area.
Zoom in the dialog box
Do one of the following:
Use the Zoom tool
to
zoom in.
Click the Zoom Out icon
below
the Navigator.
Click the Zoom In icon
below
the Navigator.
Press Ctrl + + (Windows) or Command + + (Mac OS) to zoom in.
Press Ctrl + - (Windows) or Command + - (Mac OS) to zoom out.
Rearrange images in the lightbox
You can use the lightbox to rearrange
images in the Photomerge composition. To use the lightbox, select
the Select Image tool
, and
then do one or more of the following:
Drag an image from the lightbox to the work area to add it to the composition.
Drag an image from the work area to the lightbox to remove it from the composition.
Double-click an image in the lightbox to add it to the composition.
Make sure Snap To Image is selected to automatically
snap overlapping images into place when a commonality is detected.
Rotate images
Select the Select Image tool
, and
click the image you want to rotate. Select the Rotate tool
, and
then click near the edge of the image and drag in a circular motion
around the center of the image.
Change the vanishing point of a composition
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