Angular JS watching data in a provider from a directive

Question

I have this directive that watches a variable and hides/shows a loading indicator:

}).directive('loadingIndicator', ['LoadingIndicator', function(LoadingIndicator){
 // Runs during compile
 return {
  // name: '',
  // priority: 1,
  // terminal: true,
  // scope: {}, // {} = isolate, true = child, false/undefined = no change
  // controller: function($scope, $element, $attrs, $transclude) {},
  // require: 'ngModel', // Array = multiple requires, ? = optional, ^ = check parent elements
   restrict: 'A', 
   template: '<img   style="display:bmargin: 0 auto;"src="ico_branding/Loading.gif"/>',
  // templateUrl: '',
  // replace: true,
  // transclude: true,
  // compile: function(tElement, tAttrs, function transclude(function(scope, cloneLinkingFn){ return function linking(scope, elm, attrs){}})),
  link: function($scope, iElm, iAttrs, controller) {
   $scope.display = LoadingIndicator.getLoadingIndicatorDisplayStatus();
   iElm.css("display",LoadingIndicator.getLoadingIndicatorDisplayStatus());
   iAttrs.src="/ico_branding/Loading.gif";
   $scope.$watch(
      function() {
    return LoadingIndicator.getLoadingIndicatorDisplayStatus()
  },
     function(){
     iElm.css("display",LoadingIndicator.getLoadingIndicatorDisplayStatus());

   })


  }
 };
}]);

<script src="https://ajax.googleapis.com/ajax/libs/angularjs/1.2.23/angular.min.js"></script>

I got this working when "LoadingIndicator" was a service but wanted to handle this higher for every REST call in my application. I'm using RESTANGULAr so I converted my service in a provider so I could use it in the config of my root module to be used in a request interceptor:

angular.module('loadingIndicator',[]).service('LoadingIndicator', function(){
 

 var display = "none";
  
  this.displayLoadingIndicator = function() {
   display="block";
   
   
  }
  
  this.hideLoadingIndicator = function() {
   display="none";


  }
  this.$get = function(){
   getLoadingIndicatorDisplayStatus : function(){
   return display;
   
   }
  }
  
  
  

})

 RestangularProvider.setResponseExtractor(function(response) {
    LoadingIndicatorProvider.displayLoadingIndicator();
    var newResponse = response;
    newResponse.originalElement = angular.copy(response);
    console.log(newResponse.originalElement);
    return newResponse
})

The code ran without any errors/exceptions but the "watch" of the directive was never triggered. I then even tried to make the "display" variable accessible from the directive (using this) but this still din't work. Even though the displayLoadingIndicator() is successfully called at the right time.

IS what I'm doing impossible to do. i presumed it would work as a Provider is a parent of a service, where the service version works fine.