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The origins of psychological astrology can be traced to the writings of ancient Greek philosophers such as Thales, Plato, and Aristotle (especially his De Anima treatise). Their theories on the nature of the Soul were adapted to astrology by important historical astrologers such as Ptolemy and Al-Kindi. In the twentieth century, esoteric tradition inspired Carl Jung, Swiss psychiatrist and founder of analytical psychology, to formulate his archetypal hypothesis from Plato's theory of ideas or forms. In his research into the symbolic meaning of his patient's dreams, conversations and paintings, Jung observed recurring mythical themes or archetypes. He proposed that these universal and timeless archetypes channel experiences and emotions, resulting in recognizable and typical patterns of behavior with certain probable outcomes. Jung claimed to observe a correlation between these archetypal images and the astrological themes or traditional 'gods' associated with the planets and signs of the zodiac. He concluded that the symbolic heavenly figures described by the constellations were originally inspired by projections of images created by the collective unconscious. Jung wrote "Astrology represents the sum of all the psychological knowledge of antiquity".

In collaboration with pioneer theoretical physicist (and Nobel laureate) Wolfgang Pauli, Jung developed the theory of synchronicity. This theory, which Jung compared to Aristotle's formal causation, poses that "whatever is born or done at this particular moment of time, has the quality of this moment of time". Accordingly, astrological claims of correlations between the position of heavenly bodies at the time of birth and an individual's development were defined by Jung as being acausal and not directly caused by the planets.

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