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First you must sync the image to the Apple Watch (and ensure you are running WatchOS 2.0.1 or later). It’s a good idea to create an album containing the images you want to use on your iPhone. In this case I’ve taken an image from Flickr, imported it into Photos on my Mac, and synced it to my iPhone first, but you can use any image you have on your iPhone.
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Source: COMPUTER WORLD