This is gorgeous and rare. It's called a circumhorizontal arc and it's caused by light passing through high altitude Cirrus clouds. The sight occurs only when the sun is very high in the sky, more than 58 degrees above the horizon. The hexagonal ice crystals that make up Cirrus clouds must be shaped like thick plates with their faces parallel to the ground.
When light enters through a vertical side face of such an ice crystal and leaves from the bottom face it bends, in the same way that light passes through a prism. If the crystals in the Cirrus clouds are just right the clouds light up in the colour spectrum.
This was photographed on June 6 in the sky over northern Idaho near the Washington State border.