Correct Answer : It is based on the direction of rotation of the earth
Explanation : In the celestial sphere, the Earth is imagined to be fixed and rotating. But the Celestial Sphere rotates along with the Earth. So the Azimuth Elevation system is based on the direction of Earth’s gravity. In this system, the celestial horizon is divided into 4 quadrants: North, East, South and West. It is fixed & with respect to the observer. Earth & the observer are imagined as a point at the centre of the celestial sphere.