In the foreground is the Kindron Valley. On the hill are tombs. These tombs are right across from the Temple Mount. Jesus calls the religious leaders "white washed tombs". My guess is he was looking at these tombs at the time.
This is the Pool of Siloam. There is a story in John 9 where Jesus sends a young man who is blind to this pool to be healed after he put mud in his eyes. When we washes he is healed and raises quite a commotion.