Originally posted by Lumpy
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A rainbow is seen when light is refracted and reflected by water drops viewed from the correct angle to the light source. The rainbow itself is an optical illusion and always appears opposite the light, at an angle of 42 degrees to the observer. The strength of the colours depends on the number and size of the water droplets.
There is nothing special about rain - it is simply water, but it is the most common way that a rainbow is seen. With the correct light source and angle you can see "rainbows" in fountains, waterfalls and fog. You can create a rainbow effect with moonlight if it is bright enough or artificial light - it doesn't need to be sunlight, so with a correctly placed light you could see one in the shower.
You can even see a rainbow on the top of a cloud (its called a "glory"). They are usually very faint, but can sometimes be seen from an aeroplane, and occasionally if you are standing on a hilltop looking down on a valley full of fog you can see your shadow on the fog with a rainbow halo round your head (called a Brocken Spectre). https://en.wikipedia.org/wiki/Glory_...al_phenomenon)
You say that the arch you saw was below the moon, which makes me wonder whether you saw something else. A moonbow would be opposite to the moon, not below it.
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