The only problem is that when using context instead of texexec the paragraph after a blank is not seen as a first paragraph:
<texcode>
\setupindenting[yes,medium,next]
\starttext
\input knuth
\blank
\input knuth
\stoptext
</texcode>
<context>
\setupindenting[yes,medium,next]
\input knuth
% because texexec gives different output as context
\setupindenting[yes,medium,first]
\blank
\stoptext
</context>
This can be solved in the following way:
<texcode>
\setupindenting[yes,medium,next]
\stoptext
</texcode>
<context>
\setupindenting[yes,medium,next]
\starttext
\input knuth
\blank
\input knuth
\stoptext
</context>