This is a 22° solar halo. It can form around the moon as well. They are caused by high cirrostratus clouds, which contain hexagonal prism ice crystals. Rays passing through two prism side faces inclined 60° to each other are deflected through angles from 22° up to 50°. Most rays are deflected through angles near to 22° to form the bright inner edge of the halo. Red light is refracted less strongly than other colours and so the halo's inner edge is red hued sometimes tapering away through oranges and yellows to blue. All but red are indistinct and washed out because they overlap considerably.

The actual crystal shapes responsible for the halo are uncertain. Large imperfect columns and/or clusters of columns might produce most everyday 22° halos. However, the crystals responsible for the finest and most colourful 22° halos are still not positively known.

Formation

Do not mistake it for a rainbow (caused by water droplets) or sundogs (caused by hexagonal plate crystals, best seen when the sun is low in the sky)