produced by diffraction of light

When the distance between the drops is similar to the wavelength of visible light, the light that shines through the cloud droplets is diffracted and dispersed in the manner shown below. On a clear night, for example, the light you see coming from the moon is coning straight from the moon. However if a thin cloud layer is found between the observer and the moon, the diffraction and dispersion of the moonlight actually casts a light larger than the original light source. This 'crown' of light around the sun or moon is called the corona.

When the cloud droplets are very uniform in size, the diffracted light can cause the corona to be separated into its component colors, with blue light to the inside of the red light. These colors may repeat themselves, surrounding the moon with a series of colored rings, becoming fainter as each subsequent ring is located further from the moon.

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Credits and Acknowledgments for WW2010.
Department of Atmospheric Sciences (DAS) at
the University of Illinois at Urbana-Champaign.