A new technique is proposed in this paper for real-time monitoring of brain neural activity based on the balloon model. A continuous-discrete extended Kalman filter is used to estimate the nonlinear model states. The stability, controlla- bility and observability of the proposed model are described based on the simulation and measured clinical data analysis. By introducing the controllable and observable states of the hemodynamic signal we have developed a numerical tech- nique to validate and compare the impact of brain signal parameters affecting on BOLD signal variation. This model increases significantly the signal-to-noise-ratio (SNR) and the speed of brain signal processing. A linear-quadratic regulator (LQR) also has been introduced for optimal control of the model

This paper introduces a stochastic hemodynamic system to describe the brain neural activity based on the balloon model. A continuous-discrete extended Kalman filter is used to estimate the nonlinear model states. The stability, controllability and observability of the proposed model are described based on the simulation and measurement data analysis. The observability and controllability characteristics are introduced as significant factors to validate the preference of different hemodynamic factors to be considered for diagnosis and monitoring in clinical applications. This model also can be efficiently applied in any monitoring and control platform include brain and for study of hemodynamics in brain imaging modalities such as pulse oximetry and functional near infrared spectroscopy. The work is on progress to extend the proposed model to cover more hemodynamic and neural brain signals for real-time in-vivo application.