Fire rainbows aren’t actually rainbows and they have nothing to do with fire, either. Technically known as circumhorizontal arcs, these optical phenomena occur when the sun is higher than 58° in the sky. The other ingredient forming these arcs are cirrus clouds, which are thin, feathery clouds occurring at higher altitudes. The temperature where these clouds exist is low; therefore, they are made of hexagonal ice crystals. When optimally aligned, these crystals act as a prism and that results in refraction that is reminiscent of a rainbow.
There is a popular misconception that such halos are rare. However, their frequency depends on location in particular latitude. In the United States, it is relatively common to see them several times each summer, while the phenomenon is quite rare in mid-latitude and northern Europe. So, for example, the potential for these “fire rainbows” to form in Los Angeles is 5-10 times higher than in London.