Fold fabric in half and cut out the pillow in desired circle size along the fold. Use a pencil and a ruler and mark where the lines of the rainbow will be. In this case, the 8-inch circle left about 1-inch for each color, leaving a white space at the inside curve and along the outside for sewing.
Starting with one color, pull off a long piece of wool and place at the outside mark where the fold would be. Position the fabric as needed so that it stays over the needle felting mat and continue in an arc all the way around the outside of the fabric. You can pull off more wool and continue if you run out.
When you reach the other side of the rainbow, simply trim away the excess BEFORE attempting to needle felt the area. Continue with each color so that they are immediately next to one another.
When you’ve completed the needle felting, fold the fabric into the half-circle shape so that the needle felted pattern is on the inside, and pin around the edges, leaving a section at the end open.
Sew around the half circle, leaving one section open. Trim loose threads and pull the pillow right side out through the opening. Stuff the pillow to desired stiffness. Thread a hand sewing needle with thread and use an invisible stitch to sew up the opening and finish off the pillow.