diff --git a/src/eigenscript/compiler/analysis/observer.py b/src/eigenscript/compiler/analysis/observer.py
index dfbb8bb..223ec3c 100644
--- a/src/eigenscript/compiler/analysis/observer.py
+++ b/src/eigenscript/compiler/analysis/observer.py
@@ -10,7 +10,7 @@
 This implements zero-cost abstraction: pay for geometric semantics only when used.
 """
 
-from typing import Set
+from typing import Optional, Set
 from eigenscript.parser.ast_builder import (
     ASTNode,
     Identifier,
@@ -40,10 +40,19 @@ class ObserverAnalyzer:
     Unobserved variables can be compiled to raw doubles for maximum performance.
     """
 
+    PREDICATES = {
+        "converged",
+        "diverging",
+        "oscillating",
+        "stable",
+        "improving",
+    }
+
     def __init__(self):
         self.observed: Set[str] = set()
         self.user_functions: Set[str] = set()
         self.current_function: str = None
+        self.last_assigned: Optional[str] = None
 
     def analyze(self, ast_nodes: list[ASTNode]) -> Set[str]:
         """Analyze AST and return set of variable names that need EigenValue tracking.
@@ -58,6 +67,7 @@ def analyze(self, ast_nodes: list[ASTNode]) -> Set[str]:
         self.observed = set()
         self.user_functions = set()
         self.current_function = None
+        self.last_assigned = None
 
         # First pass: collect all user-defined function names
         for node in ast_nodes:
@@ -82,7 +92,9 @@ def _visit(self, node: ASTNode):
         elif isinstance(node, FunctionDef):
             # Function parameters are always observed (might be interrogated inside)
             prev_function = self.current_function
+            prev_last_assigned = self.last_assigned
             self.current_function = node.name
+            self.last_assigned = None
 
             # In EigenScript, functions implicitly have parameter 'n'
             self.observed.add("n")
@@ -91,9 +103,11 @@ def _visit(self, node: ASTNode):
                 self._visit(stmt)
 
             self.current_function = prev_function
+            self.last_assigned = prev_last_assigned
 
         elif isinstance(node, Assignment):
             self._visit(node.expression)
+            self.last_assigned = node.identifier
 
         elif isinstance(node, Interrogative):
             # Direct observation: "why is x" marks x as observed
@@ -152,32 +166,19 @@ def _visit(self, node: ASTNode):
             self._visit(node.list_expr)
             self._visit(node.index_expr)
 
-        elif isinstance(node, Identifier):
-            # Check if this identifier is a predicate
-            if node.name in [
-                "converged",
-                "diverging",
-                "oscillating",
-                "stable",
-                "improving",
-            ]:
-                # Predicates require the last variable to be observed
-                # This is a simplified heuristic - ideally we'd track scope
-                pass
-
     def _check_for_predicates(self, node: ASTNode):
         """Check if condition uses predicates (converged, diverging, etc.)."""
+        if node is None:
+            return
+
         if isinstance(node, Identifier):
-            if node.name in [
-                "converged",
-                "diverging",
-                "oscillating",
-                "stable",
-                "improving",
-            ]:
-                # TODO: Mark the variable being tested as observed
-                # For now, this is handled by the codegen heuristic of "last variable"
-                pass
+            if node.name in self.PREDICATES and self.last_assigned:
+                self.observed.add(self.last_assigned)
+        elif isinstance(node, UnaryOp):
+            self._check_for_predicates(node.operand)
+        elif isinstance(node, BinaryOp):
+            self._check_for_predicates(node.left)
+            self._check_for_predicates(node.right)
 
     def _mark_expression_observed(self, node: ASTNode):
         """Recursively mark all identifiers in an expression as observed."""
diff --git a/tests/compiler/test_codegen.py b/tests/compiler/test_codegen.py
index 61352fa..8d55ef2 100644
--- a/tests/compiler/test_codegen.py
+++ b/tests/compiler/test_codegen.py
@@ -10,6 +10,7 @@
 try:
     from llvmlite import binding as llvm
     from eigenscript.compiler.codegen.llvm_backend import LLVMCodeGenerator
+    from eigenscript.compiler.analysis.observer import ObserverAnalyzer
     from eigenscript.lexer import Tokenizer
     from eigenscript.parser.ast_builder import Parser
 
@@ -198,6 +199,26 @@ def test_module_verification(self):
             llvm_ir = self.compile_source(source)
             assert self.verify_llvm_ir(llvm_ir), f"Failed to verify: {source}"
 
+    def test_predicate_condition_marks_variable_observed(self):
+        """Predicates should mark the last assigned variable as observed."""
+        source = """x is 0
+loop while not converged:
+    x is x + 1"""
+
+        tokenizer = Tokenizer(source)
+        tokens = tokenizer.tokenize()
+        parser = Parser(tokens)
+        ast = parser.parse()
+
+        analyzer = ObserverAnalyzer()
+        observed_vars = analyzer.analyze(ast.statements)
+        assert "x" in observed_vars
+
+        codegen = LLVMCodeGenerator(observed_variables=observed_vars)
+        llvm_ir = codegen.compile(ast.statements)
+
+        assert 'call i1 @"eigen_check_converged"' in llvm_ir
+
     def test_runtime_functions_declared(self):
         """Test that runtime functions are properly declared."""
         source = "x is 42"