The problem of observer design for fault detection in a class of nonlinear systems subject to parametric and signal uncertainties is studied. The design procedure includes formalized optimization of observer free parameters in terms of trade-offs for fault detection performance and robustness to external disturbances and model uncertainties. The technique makes use of some monotonicity conditions imposed on the estimation error dynamics. Efficiency of the proposed approach is demonstrated through the Oscillatory Failure Case in aircraft control surface servo-loops.