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Translucent image on transparent background

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I have a png of a green arrow on a white background.  I want to make the white transparent and the green translucent.

What I want to do seems simple enough, but everything I try fails.  I can get the background transparent, but the arrow is never translucent.

I tried moving the arrow to a second layer, changing the opacity, but no luck.

Also must I flatten the image before saving?

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