Reverse proxy setting for web application

Hello,

I've installed owncloud and I'm able to make it work using the URL
http://owncloud.mydomain.org

I would like NGINX to reverse proxy so that I would access owncloud through
http://www.mydomain.org/owncloud

First I'd like to specify, that I woudln't like a URL rewriting.

1) I trusted www.mydomain.org in the trusted domains in owncloud config file

2) I edited the nginx configuration for www.mydomain.org which is a different file from the one used for owncloud.mydomain.org. And put this section:
location /owncloud/ {
proxy_set_header X-Real-IP $remote_addr;
proxy_set_header X-Forwarded-For $remote_addr;
proxy_set_header Host $http_host;
proxy_pass http://owncloud.mydomain.org;
}

The problem is that I receive a code 500 internal error. The logs say "800 worker_connections are not enough while connecting to upstream". So I assume my configuration is incorrect

3) When I write "location /owncloud/", does it also include subdirectories ?

Thank you