We start by creating a circle. Select the Ellipse Shape tool (L). Hold down Shift key while dragging. Turn on Smart Guides, go to View > Smart Guides or hit command/control + u. Make sure your Rulers are turned on. Go to View > Show Rulers or hit command/control + r. Drag a horizontal guide from the top Ruler to the middle of the circle. Select the Rotation tool and click in the center of the circle to set the rotation point. Rotate the circle 45°. While dragging hold down Shift key so the rotation snaps to 45°. With Smart Guides turned on you should also be able to see when you’ve turned the circle 45°. Select the Direct Selection tool (white arrow) and select the path segment on the right of the circle. Hit the delete key.
Now select the Pen Tool and click in the top right point of the circle where you have just deleted the segment of the path to redraw this part as shown above in the image on the left. Hold down the Shift Key and click somewhere on the guide so you draw a perfect 45° line. Click in the bottom right point of the circle shape (that now looks more like a drop of water laying on its side) to close the path.
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