The 50% is part of the Fibonacci retracements. The most common fib retracements are 0.382, 0.500, 0.618. However I can't remember the last time I used a Fib retracement to trade. I think I used in a few times on the daily or weekly charts and maybe in the stock market but rarely is it to be used on the hourly charts. Not good for day trading at all.
Technically the 50% level is not a Fibonacci level. It just naturally fits perfectly between 38.2% and 61.8%.
Fib retracements are vital to Elliott Wave analysis, so I always chart relevant Fib levels and I find them extremely helpful. I am not purely an EW trader though. I incorporate lots of other methods like horizontal S/R, moving averages, Bollinger bands, etc. which I think is key to my success.
I think the indicator works as long as it seems like a common area where to take a long or short. However it usually works best if its near a regular horizontal support/resistance line.
Exactly. When you can find support and resistance levels where there is confluence among different methods, it's usually pretty powerful. When key Fib levels line up perfectly with horizontal S/R, it's usually a huge trading opportunity not to be missed.
That's really the ideal way to use any TA method, in combination with others.