On Swasey Beach, in Green River, UT I saw one of these. I only had my phone to take a picture, but yes, I’ve seen one. It was beautifuuuuuuul.
I’ve never been lucky enough to see one of these, have you? Make no mistake, though, they’re real. The technical term for the fire rainbow is a circumhorizontal arc.
High in the atmosphere, cirrus clouds form as wispy layers of ice that can stretch on for hundreds of miles. As light from the sun hits it, it refracts as if it was being shone through a prism.
This refraction happens because when light goes from one medium to another, like from air to water or air to ice, it can be bent. Different wavelengths are bent to different extents, separating white light into its component colors.
Want to know more? Check out this Khan Academy lesson on refraction.