Step 1: Find the offenders
Start by heading to File>Open and opening the photos you want to merge in Photoshop Elements. Command+Click on both of them to select them ready for use.
Step 2: In the menu
Head to the Enhance heading in the menu bar and then click on Photomerge>Photomerge Exposure to start the process and let Photoshop Elements work its magic.
Step 3: Simple Blending
If you’re happy to let Photoshop Elements do the hard work for you or you simply don’t have too much time, select Simple Blending to jump to the finished result.
Step 4: Smart Blending
For more control over how your finished image looks, you’ll want to switch to the Smart Blending mode to enable the Highlight, Shadows and Saturation sliders.
Step 5: Get adjusting
Use the sliders to control how the two photos you’ve selected are merged by Photoshop Elements, hovering over each of them should give you some pointers.
Step 6: Go Manual
If you want to get particularly creative with the Photomerge set of tools, or if the sliders aren’t quite cutting it for you, click on the Manual tab to head to Manual mode.
Step 7: Source and final
Photoshop Elements should automatically select a source image for you, so drag the other image that you’re using into the final frame on the right of the window.
Step 8: Pencil it in
Use the Pencil tool to highlight the sections of the source image that you’d like to merge into the final image. You can use the slider to adjust the pencil size.
Step 9: Get accurate
If you find your pencil markings aren’t quite accurate enough, grab the Eraser tool from the app’s sidebar and use it to tidy things up. Results are shown in real-time.
(Click on the image below to zoom in and view the annotations)