There are pros and cons to both, but the decision is ultimately yours. You'll have to decide based on the style of your game and the type of game.
Static position: Always in the same place, predictable. This means the user will always know where the indicator will be and allows them to avoid covering it up on their own. Kind of boring and requires some kind of constant HUD.
Dynamic position: Potentially more intuitive, and feels more interactive. Easily allows for a HUD-less display. Potential of being covered up by fingers.
There are changes you can make to both to offset the pros and cons. For example you can make the static indicator pop down when activated, but always pop down to the same spot. Or you can make the dynamic indicator large enough that it couldn't be covered up.
User interfaces benefit greatly from play testing. It's often hard to tell how people will want to use the application until they start using it. For these types of play testing, give it to people and leave the room, so they can test it without you watching over them. Try giving some people instructions and let others try to figure it out on their own. Have a few different versions of the UI implemented for them to test.