diff --git a/src/eigenscript/compiler/analysis/observer.py b/src/eigenscript/compiler/analysis/observer.py
index dfbb8bb..7bc9679 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,
@@ -26,6 +26,7 @@
     ListLiteral,
     Index,
     Program,
+    TentativeAssignment,
 )
 
 
@@ -40,10 +41,19 @@ class ObserverAnalyzer:
     Unobserved variables can be compiled to raw doubles for maximum performance.
     """
 
+    PREDICATE_NAMES = {
+        "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 +68,7 @@ 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 +93,9 @@ 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")
@@ -90,9 +103,12 @@ def _visit(self, node: ASTNode):
             for stmt in node.body:
                 self._visit(stmt)
 
+            self.last_assigned = prev_last_assigned
             self.current_function = prev_function
 
-        elif isinstance(node, Assignment):
+        elif isinstance(node, (Assignment, TentativeAssignment)):
+            # Assignment/TentativeAssignment identifier is a string name of the target
+            self.last_assigned = node.identifier
             self._visit(node.expression)
 
         elif isinstance(node, Interrogative):
@@ -152,32 +168,19 @@ 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.PREDICATE_NAMES 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/test_observer_predicates.py b/tests/test_observer_predicates.py
new file mode 100644
index 0000000..381640d
--- /dev/null
+++ b/tests/test_observer_predicates.py
@@ -0,0 +1,45 @@
+"""
+Tests for predicate handling in the ObserverAnalyzer.
+
+Ensure that predicate usage marks the relevant variables as observed so
+predicate checks operate on EigenValue-tracked variables.
+"""
+
+import textwrap
+
+from eigenscript.lexer import Tokenizer
+from eigenscript.parser import Parser
+from eigenscript.compiler.analysis.observer import ObserverAnalyzer
+
+
+def _analyze(code: str):
+    """Helper to run observer analysis on EigenScript code."""
+    source = textwrap.dedent(code).strip()
+    tokens = Tokenizer(source).tokenize()
+    ast = Parser(tokens).parse()
+    analyzer = ObserverAnalyzer()
+    return analyzer.analyze(ast.statements)
+
+
+def test_predicate_marks_last_assignment_observed():
+    """A predicate condition should mark the last assigned variable as observed."""
+    observed = _analyze(
+        """
+        x is 1
+        if converged:
+            x is x + 1
+        """
+    )
+    assert "x" in observed
+
+
+def test_predicate_with_not_marks_last_assignment_observed():
+    """NOT predicate conditions should also mark the last assigned variable."""
+    observed = _analyze(
+        """
+        value is 0
+        loop while not converged:
+            value is value + 1
+        """
+    )
+    assert "value" in observed