Nginx redirect request based path variable - nginx

Question

I have an html web server running on my EC2 instance on port 80 (HTTP). I'm using Nginx as a reverse proxy (which is also installed on the instance) to redirect requests from port 8080 based on the path ('/blue') to my HTML web server. So I'm requesting HTTP://ec2_instance_dns:8080/blue and expect to redirect to HTTP://ec2_instance_dns:80.
However, I'm having issues redirecting the request based on the path variable. My /etc/nginx/conf.d/deafult.conf attached below:
server {
listen 8080;
server_name default;
client_max_body_size 32M;
underscores_in_headers on;
root /var/www/html/index.html;
location /blue {
proxy_set_header Upgrade $http_upgrade;
proxy_set_header Connection "upgrade";
proxy_http_version 1.1;
proxy_set_header Host $host;
proxy_read_timeout 120;
proxy_next_upstream error timeout invalid_header http_500;
proxy_connect_timeout 90;
proxy_pass http://localhost:80;
}
}
My /etc/nginx/nginx.conf attached bellow:
user nginx;
worker_processes auto;
error_log /var/log/nginx/error.log;
pid /var/run/nginx.pid;
include /usr/share/nginx/modules/*.conf;
events {
worker_connections 1024;
}
http {
log_format main '$remote_addr - $remote_user [$time_local] "$request" '
'$status $body_bytes_sent "$http_referer" '
'"$http_user_agent" "$http_x_forwarded_for"';
access_log /var/log/nginx/access.log main;
sendfile on;
tcp_nopush on;
tcp_nodelay on;
keepalive_timeout 65;
types_hash_max_size 2048;
include /etc/nginx/mime.types;
default_type application/octet-stream;
include /etc/nginx/conf.d/*.conf;
server {
listen 8080;
listen [::]:8080;
server_name localhost;
root /var/www/html/index.html;
include /etc/nginx/default.d/*.conf;
location / {
}
error_page 404 /404.html;
location = /40x.html {
}
error_page 500 502 503 504 /50x.html;
location = /50x.html {
}
}
}
When trying to request HTTP://ec2_instance_dns:8080/blue I'm getting the above error:
What further configuration should I do? Thank you.