Astronomically, Rahu and Ketu denote the points of intersection of the paths of the Sun and the Moon as they move on the celestial sphere. Therefore, Rahu and Ketu are respectively called the north and the south lunar nodes. The fact that eclipses occur when the Sun and the Moon are at one of these points gives rise to the myth of the swallowing of the Sun and the Moon by the demon snake.
According to legend, during the Samudra manthan, the asura Rahu drank some of the amrita (divine nectar). The sun and moon realized it and alerted Mohini (the female avatar of Vishnu). Mohini cut off the asura’s head before the nectar could pass his throat. The head, however, remained immortal due to the effect of amrita and became Rahu. http://en.wikipedia.org/wiki/Rahu
In Hindu astrology Ketu represents karmic collections both good and bad, spirituality and supernatural influences.
Ketu signifies the spiritual process of the refinement of materialization to spirit and is considered both malefic and benefic, as it causes sorrow and loss, and yet at the same time turns the individual to God. In other words, it causes material loss in order to force a more spiritual outlook in the person. Ketu is a karaka or indicator of intelligence, wisdom, non-attachment, fantasy, penetrating insight, derangement, and psychic abilities.
He is most powerful in Ashvini 0° – 13°20′ Aries (Mesha), Magha 0° – 13°20′ Leo (Simha) and Mula 0° – 13°20′ Sagittarius (Dhanus).