It is a geometrical representation of the relationships among the twelve tones of the chromatic system – all the notes in the equal temperament; their corresponding key signatures and associated major and minor keys. If you start in C and move clockwise using a perfect fifth interval, you get all the twelve tones until you arrive at C again. If you wish to move in the circle counter clockwise you will get the same twelve tones while ascending in perfect fourths.
The circle is also commonly used to represent the relationship between diatonic scales and how many sharps or flats are associated to a given tonal center. Again, moving clockwise will add a sharp or remove a flat to the next tonal center we move to. Because sharps rise half-step to the pitch they are associated to, it is said that moving clockwise in the circle leads to brighter tonalities. On the other hand, moving counter clockwise increases the number of flats and thus leads to darker tonalities. For this reason, the circle can also be used as reference for modulation purposes, while choosing to modulate to more distant or closer tonalities – distant tonalities have a greater difference in the number of sharps or flats:
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