diff --git a/python/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java b/python/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java
index ab91e2b3dca9..30700ce2af44 100644
--- a/python/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java
+++ b/python/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java
@@ -474,7 +474,7 @@ public class PyControlFlowBuilder extends PyRecursiveElementVisitor {
     boolean isStaticallyTrue = false;
     if (condition != null) {
       condition.accept(this);
-      isStaticallyTrue = PyEvaluator.evaluateAsBooleanNoResolve(condition, false);
+      isStaticallyTrue = loopHasAtLeastOneIteration(node);
     }
     final Instruction head = myBuilder.prevInstruction;
     final PyElsePart elsePart = node.getElsePart();
@@ -509,7 +509,7 @@ public class PyControlFlowBuilder extends PyRecursiveElementVisitor {
     }
     final Instruction head = myBuilder.prevInstruction;
     final PyElsePart elsePart = node.getElsePart();
-    if (elsePart == null && !PyEvaluator.evaluateAsBooleanNoResolve(source, false)) {
+    if (elsePart == null && !loopHasAtLeastOneIteration(node)) {
       myBuilder.addPendingEdge(node, myBuilder.prevInstruction);
     }
     final PyStatementList list = forPart.getStatementList();
@@ -544,6 +544,16 @@ public class PyControlFlowBuilder extends PyRecursiveElementVisitor {
     myBuilder.flowAbrupted();
   }
 
+  private static boolean loopHasAtLeastOneIteration(@NotNull PyLoopStatement loopStatement) {
+    final PyExpression expression = loopStatement instanceof PyForStatement
+                                    ? ((PyForStatement)loopStatement).getForPart().getSource()
+                                    : loopStatement instanceof PyWhileStatement
+                                      ? ((PyWhileStatement)loopStatement).getWhilePart().getCondition()
+                                      : null;
+
+    return PyEvaluator.evaluateAsBooleanNoResolve(expression, false);
+  }
+
   @Override
   public void visitPyBreakStatement(final PyBreakStatement node) {
     myBuilder.startNode(node);
@@ -569,6 +579,15 @@ public class PyControlFlowBuilder extends PyRecursiveElementVisitor {
       else {
         myBuilder.addPendingEdge(null, null);
       }
+
+      // There is no edge between loop statement and next after loop instruction
+      // when loop has at least one iteration
+      // so `continue` is marked as one more last instruction in the loop
+      // see visitPyWhileStatement
+      // see visitPyForStatement
+      if (loopHasAtLeastOneIteration(loop)) {
+        myBuilder.addPendingEdge(loop, myBuilder.prevInstruction);
+      }
     }
     myBuilder.flowAbrupted();
   }
diff --git a/python/testData/codeInsight/controlflow/continueinpositiveiteration.py b/python/testData/codeInsight/controlflow/continueinpositiveiteration.py
new file mode 100644
index 000000000000..bf46208f6871
--- /dev/null
+++ b/python/testData/codeInsight/controlflow/continueinpositiveiteration.py
@@ -0,0 +1,7 @@
+import sys
+
+for s in "abc":
+    if len(s) == 1:
+        continue
+    sys.exit(0)
+raise Exception("the end")
\ No newline at end of file
diff --git a/python/testData/codeInsight/controlflow/continueinpositiveiteration.txt b/python/testData/codeInsight/controlflow/continueinpositiveiteration.txt
new file mode 100644
index 000000000000..530697b5e4b3
--- /dev/null
+++ b/python/testData/codeInsight/controlflow/continueinpositiveiteration.txt
@@ -0,0 +1,16 @@
+0(1) element: null
+1(2) element: PyImportStatement
+2(3) WRITE ACCESS: sys
+3(4) element: PyForStatement
+4(5) element: PyTargetExpression: s
+5(6) WRITE ACCESS: s
+6(7) element: PyIfStatement
+7(8) READ ACCESS: len
+8(9,11) READ ACCESS: s
+9(10) element: PyStatementList. Condition: len(s) == 1:true
+10(3,13) element: PyContinueStatement
+11(12) element: PyExpressionStatement
+12(15) READ ACCESS: sys
+13(14) element: PyRaiseStatement
+14(15) READ ACCESS: Exception
+15() element: null
\ No newline at end of file
diff --git a/python/testData/codeInsight/controlflow/trytry.txt b/python/testData/codeInsight/controlflow/trytry.txt
index fa2030c84547..ecaf22b901a7 100644
--- a/python/testData/codeInsight/controlflow/trytry.txt
+++ b/python/testData/codeInsight/controlflow/trytry.txt
@@ -23,7 +23,7 @@
 22(23,37) element: PyIfPartElif. Condition: x == 0:false
 23(24,26,37) READ ACCESS: x
 24(25) element: PyStatementList. Condition: x == 1:true
-25(7,37) element: PyContinueStatement
+25(7,37,40) element: PyContinueStatement
 26(27,37) element: PyIfPartElif. Condition: x == 1:false
 27(28,31,37) READ ACCESS: x
 28(29) element: PyStatementList. Condition: x == 2:true
diff --git a/python/testSrc/com/jetbrains/python/PyControlFlowBuilderTest.java b/python/testSrc/com/jetbrains/python/PyControlFlowBuilderTest.java
index b6a56702ea11..98c949d23625 100644
--- a/python/testSrc/com/jetbrains/python/PyControlFlowBuilderTest.java
+++ b/python/testSrc/com/jetbrains/python/PyControlFlowBuilderTest.java
@@ -284,6 +284,11 @@ public class PyControlFlowBuilderTest extends LightMarkedTestCase {
     doTest();
   }
 
+  // PY-29767
+  public void testContinueInPositiveIteration() {
+    doTest();
+  }
+
   private void doTestFirstStatement() {
     final String testName = getTestName(false).toLowerCase();
     configureByFile(testName + ".py");
diff --git a/python/testSrc/com/jetbrains/python/inspections/PyUnreachableCodeInspectionTest.java b/python/testSrc/com/jetbrains/python/inspections/PyUnreachableCodeInspectionTest.java
index d6f409cf4b9e..edb6d0292fcc 100644
--- a/python/testSrc/com/jetbrains/python/inspections/PyUnreachableCodeInspectionTest.java
+++ b/python/testSrc/com/jetbrains/python/inspections/PyUnreachableCodeInspectionTest.java
@@ -127,6 +127,19 @@ public class PyUnreachableCodeInspectionTest extends PyInspectionTestCase {
     );
   }
 
+  // PY-29767
+  public void testContinueInPositiveIterationWithExitPoint() {
+    doTestByText(
+      "import sys\n" +
+      "\n" +
+      "for s in \"abc\":\n" +
+      "    if len(s) == 1:\n" +
+      "        continue\n" +
+      "    sys.exit(0)\n" +
+      "raise Exception(\"the end\")"
+    );
+  }
+
   @NotNull
   @Override
   protected Class<? extends PyInspection> getInspectionClass() {