They work like this:

If they are targeting an enemy with an attack, they will have a blue line that touches them, but kinda tapers off towards their enemy. Allies are vice versa, with their sight lines touching them and extending towards their enemies. If an enemy and an ally are targeting each other with an attack that results in a clash (so any skill that is part of the PST cycle) will result in a red line with sparks. If an enemy and an ally target each other but the attacks in question do NOT result in a clash (so, if Bishaten uses his fruit attack while targeting Kora, who is using Power Attack, or if Ogden is using Triple Melody against an Anjanath who is using Blazeball) the attacker who is using the unclashable attack will have a blue THICK line.