https://github.com/jrblevin/markdown-mode/issues/75

markdown-cycle.patch

commit 879cf7c508b457cf508bcf50b293e3656b1e7bff
Author: Syohei YOSHIDA <syohex@gmail.com>
Date:   Tue Jan 12 19:12:26 2016 +0900

    Fix markdown-cycle issue

diff --git a/markdown-mode.el b/markdown-mode.el
index e59c4c2..6fbd7ae 100644
--- a/markdown-mode.el
+++ b/markdown-mode.el
@@ -4916,6 +4916,16 @@ For example, headings inside preformatted code blocks may match
 (defvar markdown-cycle-global-status 1)
 (defvar markdown-cycle-subtree-status nil)
 
+(defun markdown-next-preface ()
+  (let (finish)
+    (while (and (not finish) (re-search-forward (concat "\n\\(?:" outline-regexp "\\)")
+                                                nil 'move))
+      (unless (markdown-code-block-at-point)
+        (goto-char (match-beginning 0))
+        (setq finish t))))
+  (when (and (bolp) (or outline-blank-line (eobp)) (not (bobp)))
+    (forward-char -1)))
+
 (defun markdown-cycle (&optional arg)
   "Visibility cycling for Markdown mode.
 If ARG is t, perform global visibility cycling.  If the point is
@@ -4973,7 +4983,8 @@ Derived from `org-cycle'."
         (setq markdown-cycle-subtree-status nil))
        ((>= eol eos)
         ;; Entire subtree is hidden in one line: open it
-        (markdown-show-entry)
+        (cl-letf (((symbol-function 'outline-next-preface) #'markdown-next-preface))
+          (markdown-show-entry))
         (markdown-show-children)
         (message "CHILDREN")
         (setq markdown-cycle-subtree-status 'children))