Click the foreground color swatch. On the Color dialogue, you notice only 256 greys. Select the bottom right color. Pure white, palette index color 255. Pure white is totally opaque.
Pure black is fully transparent.
We will use both here. As you paint, more of the sunset image is exposed and less sky from the background is visible. Follow the contours of the Mountains. Don't worry if you over paint, we will repair in the next step. When you have the sunset sky fully exposed, click the foreground color swatch again and choose pure Black on the palette.