Unresolved variable or type $

I am evaluating WebStorm with a view to using it for Javascript development. I am creating a project which uses jquery, and the jquery.js file is part of the project. In my own js file, whenever I use jquery, I get the warning: "Unresolved variable or type $".
How do I tell WebStorm that my js file uses jquery?

I have tried adding the jquery.js file as an external library, but that didn't help.

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