I wanted to create a Sign up goal in Google Analytics. Adding an event for signup is simple enough:
gtag('event', 'sign_up', { method: 'Direct' });
This successfully created events

However when I try to configure the goal as such:

Nothing happens, the Goal conversion is not counted for the events shown above.
I am trying to follow instructions from here https://developers.google.com/analytics/devguides/collection/gtagjs/events
However I found very little documentation on tracking events as goals.
How do I configure a goal based on the standard engagement events in Google Analytics?