Hey,
ok so, one thing that stands out is your canvas size. theres a lot of space that doesnt help selling your concept. try to focus more on whats going on and less on the surrounding. focus on the dragon, the building and the guy inside.
the lack of depths is partly due to the rockformation being so uniform, both in scale and shading. vary it up a bit and figure out where the lights coming from, what shadows the rocks will cast.
the clear sky is no problem. making gradients in pixelart is hard to get right. nothing wrong with monocolors.
overall there is a lack of contrast though. play around with the HSV sliders a bit, start experimenting. youre mainly using linear ramps. try to hue shift them to give your image a more interesting mood
the dragon itself doesnt seem very menacing and as spooks mentioned the hiding spot is not very hiding. the dragon could easily snag him like that. It's hard to tell the idea you had in mind.
