Fire Rainbow or circumhorizontal arc, is a rare optical phenomenon. It is a kind of ice halos formed by the refraction of sun. Actually, it has nothing to do with fire or rainbows, but the way it looks in the sky corresponds to the name exactly.
Rainbow coloured flame can appears mainly during summer when the sun is at the 58 degrees and higher. There should be a high elevation cirrus cloud with plate-shaped ice crystals. Then, the sunlight has to go through the ice crystals at a particular angle and, as a result, a beautifully coloured prism appears in the sky.
The location also matters. Fire rainbows can't be seen in places north of 55°N or south of 55°S. The best location to watch this phenomenon is mid-latitudes and close to the equator. In the US circumhorizontal arcs are quite common can appear several times a year from late March till late September.