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This is a fairly simple effect with only a few options to set. It is
often used as part of a style to set the color that will be applied as
the layers fill.
If you look at the deconstructed Layers
palette at the bottom of the page, you will see that the Gradient Overlay
consists of a filled layer, blend mode Normal, and Opacity 100 %,
added above the layer the effect is applied to. It is grouped with that
layer, and thus clipped, which means it has its visibility limited to
the outlines of that layers content.

Settings, listed from the top down, are as follows.
- Blend Mode - All the usual offerings.
- Opacity - Reduce this if you want to allow the image the overlay
is applied to to show through the gradient.
- Gradient - Click on the little tiny down arrow to the right
of the gradient thumbnail to access the pop-up palette and choose a
gradient from the presets. To create your own custom gradient on the
spot, click on the gradient thumbnail.
- Reverse - Switches the colors in the gradient. Whatever was
the end color will become the start color, and vice versa.
- Style - Linear, radial, reflected, angle, or diamond. Same
as the gradient tool.
- Align with Layer - This will align the gradient to the layer
contents rather than the overall image contents. For example if you
are applying the Gradient Overlay effect to a layer which only contains
one small object far from the images center, this will scale the gradient
to fit within the small object, center it within the object, and link
it to the layer so that the gradient moves with the layer.
- Angle - Drag on the line within the circle to change the direction
from which the gradient is applied across the image.
You can also drag directly on the image with the cursor to change both
angle, and the portion of the gradient that shows within the layer.
- Scale - This changes the size of the gradient. Larger settings
cause the colored gradations to be wider, and more gradual. Smaller
settings do the reverse. Very small settings cause the gradient to complete
within the limits of the image, leaving the end color to fill the remaining
area. Using the Preview thumbnail from the Gradient Overlays dialog
box, here are two different Scale settings. First, a scale setting of
62.
And, next, a scale setting of 28.
In the example below, I used the Spectrum gradient, with these settings.
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