So when I was messing with my Ibuki I just made her new move stack on the sprites. I think you may want to do this method.
I'd say do the sprites like normal, then add the effect on top. You can make it transparent and it'll really sell it. I try to stack the FX on my characters though. Like Have 2 explods. One's in the bg and ones on top. So if P2 is hit it looks like P2's inside the move.
This is probably the best example of what I mean.
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btw, I think the very top of his hat, the light from underneath should be there. Just like a small line or something. This idea is super dope.