How on earth do I add color changing effects.

I have a layer dedicated to the player and a sprite called Charging. The charging sprite is just a colored square with an animation that makes it cycle through colors. I want the Charging sprite to be invisible unless key X is down BUT, I dont want it to look like a square I only want it to appear where the player sprite is, so that it is the shape of the player at all times. Does anyone know how I do this? Here is the result of what I am talking about:

Use the effect Set color and adjust HSV... There is also a change tint. Play with the effects browser, and you will probably come up with something

Have you looked at the blendmodes example?

Sounds to me a simple blendmode would do the trick..