Fortress you and I observed in rocky peak (5)
I believe the answer is:
tower
'fortress' is the definition.
(thesaurus)
'you and i observed in rocky peak' is the wordplay.
'you and i' becomes 'we'.
'observed in' is an insertion indicator.
'rocky peak' becomes 'tor' (I've seen this in another clue).
'we' placed into 'tor' is 'TOWER'.
(Other definitions for tower that I've seen before include "Drawer" , "Campanile, for example" , "Tall building - loom (over)" , "Minaret, for example" , "Turret" .)