Hi 111111, try making the blending mode on the top layer "Multiply" (click on the button that says "Normal" in you layer palette.)
You should now have a sort of tranparency. To soften the edge use a layer mask on the top layer (Layer menu > add layer mask). Masks allow you to paint in a channel which specifies which parts of that layer remain visible.
(see Photoshop "help" for more info on masks)
Using a very soft brush, with a low opacity, paint the areas whichyou want to blend on the top layer.