Create a new 340x340 pixel document.

Then show channels, and create a new channel .

Next in the new 'alpha 1' channel, select the Elliptical Marquee Tool, and make a circle with 70 x 70 pixel dimensions. This will be the rounded edges of your button.

Next select the Rectangular Marquee Tool. Start the selection right near the top middle part of the circle, and then drag it out to the right until the height is 70 pixels as well.

If it's not exactly aligned with the circle after your done selecting, then use the arrow keys to adjust then fill , the selection with white.

Now you will have something like a rectangle, but one end is a half circle. Now make a selection of the half circle and some of the rectangle, like this:

Now you want to flip the selection horizontally, then click and drag the selection to the right so it matches up. If you are having trouble matching the edges up, Try holding down shift, it locks the image to the x, y and x+y axis while dragging. Then you want to align the image to the vertical and horizontal centers.

Now you want to load the selection from the alpha channel.

Then show layers, and create a new layer and name it 'button back'. Show colors, and use the color [R: 66, G: 127, B: 180].

Then fillthe selection. Now my pill is about 270 x 70 pixels. Now remember that if you are doing a smaller size, you might get a weird outcome. Best idea is to make it the same size as shown, and shrink it later. Now deselect.

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