diff --git a/system/src/Grav/Common/Markdown/ParsedownGravTrait.php b/system/src/Grav/Common/Markdown/ParsedownGravTrait.php
index b31d99fe0..cd7653803 100644
--- a/system/src/Grav/Common/Markdown/ParsedownGravTrait.php
+++ b/system/src/Grav/Common/Markdown/ParsedownGravTrait.php
@@ -255,7 +255,7 @@ trait ParsedownGravTrait
                         $medium->urlHash($url['fragment']);
                     }
 
-                    $excerpt['element'] = $medium->parseDownElement($title, $alt, $class);
+                    $excerpt['element'] = $medium->parseDownElement($title, $alt, $class, true);
 
                 } else {
                     // not a current page media file, see if it needs converting to relative
diff --git a/system/src/Grav/Common/Page/Medium/ImageMedium.php b/system/src/Grav/Common/Page/Medium/ImageMedium.php
index 85de365d3..7beed6c3e 100644
--- a/system/src/Grav/Common/Page/Medium/ImageMedium.php
+++ b/system/src/Grav/Common/Page/Medium/ImageMedium.php
@@ -1,6 +1,7 @@
 <?php
 namespace Grav\Common\Page\Medium;
 
+use Grav\Common\Utils;
 use Grav\Common\Data\Blueprint;
 
 class ImageMedium extends Medium
@@ -136,7 +137,15 @@ class ImageMedium extends Medium
      */
     public function url($reset = true)
     {
-        $output = preg_replace('|^' . preg_quote(GRAV_ROOT) . '|', '', $this->saveImage());
+        $pages_dir = self::$grav['locator']->findResource('page://');
+        $image_path = self::$grav['locator']->findResource('cache://images', true);
+        $image_dir = self::$grav['locator']->findResource('cache://images', false);
+
+        $output = preg_replace('|^' . preg_quote($pages_dir) . '|', '', $this->saveImage());
+
+        if (Utils::startsWith($output, $image_path)) {
+            $output = '/' . $image_dir . preg_replace('|^' . preg_quote($image_path) . '|', '', $output);
+        }
 
         if ($reset) {
             $this->reset();
@@ -155,6 +164,7 @@ class ImageMedium extends Medium
         if (!$this->image) {
             $this->image();
         }
+
         return $this;
     }
 
@@ -261,6 +271,7 @@ class ImageMedium extends Medium
         if ($this->image) {
             $this->image();
             $this->image->clearOperations(); // Clear previously applied operations
+            $this->querystring('');
             $this->filter();
         }
 
diff --git a/system/src/Grav/Common/Page/Medium/Medium.php b/system/src/Grav/Common/Page/Medium/Medium.php
index f1ce336fd..33e734e20 100644
--- a/system/src/Grav/Common/Page/Medium/Medium.php
+++ b/system/src/Grav/Common/Page/Medium/Medium.php
@@ -155,7 +155,7 @@ class Medium extends Data implements RenderableInterface
      */
     public function querystring($querystring = null, $withQuestionmark = true)
     {
-        if ($querystring) {
+        if (!is_null($querystring)) {
             $this->set('querystring', ltrim($querystring, '?&'));
 
             foreach ($this->alternatives as $alt) {
diff --git a/tests/fake/nested-site/user/pages/01.item1/sample-image.jpg b/tests/fake/nested-site/user/pages/01.item1/home-cache-image.jpg
similarity index 100%
rename from tests/fake/nested-site/user/pages/01.item1/sample-image.jpg
rename to tests/fake/nested-site/user/pages/01.item1/home-cache-image.jpg
diff --git a/tests/fake/nested-site/user/pages/01.item1/home-sample-image.jpg b/tests/fake/nested-site/user/pages/01.item1/home-sample-image.jpg
new file mode 100644
index 000000000..3170ac497
Binary files /dev/null and b/tests/fake/nested-site/user/pages/01.item1/home-sample-image.jpg differ
diff --git a/tests/fake/nested-site/user/pages/02.item2/02.item2-2/cache-image.jpg b/tests/fake/nested-site/user/pages/02.item2/02.item2-2/cache-image.jpg
new file mode 100644
index 000000000..3170ac497
Binary files /dev/null and b/tests/fake/nested-site/user/pages/02.item2/02.item2-2/cache-image.jpg differ
diff --git a/tests/unit/Grav/Common/MarkdownLinksTest.php b/tests/unit/Grav/Common/MarkdownLinksTest.php
index 4384bb741..3924eb963 100644
--- a/tests/unit/Grav/Common/MarkdownLinksTest.php
+++ b/tests/unit/Grav/Common/MarkdownLinksTest.php
@@ -71,19 +71,63 @@ class MarkdownTest extends \Codeception\TestCase\Test
     {
     }
 
-    public function testSlugRelativeImages()
+    public function testImages()
     {
         $this->uri->initializeWithURL('http://testing.dev/item2/item2-2')->init();
 
-//        * up and down with anchor ![](../gallery/preset-8.jpg?cropResize=200,200)
-//        * up more and down more ![](../../blog/focus-and-blur/unslpash_yair_hazout.jpg?cropResize=200,200)
-//        * just down ![](item2-1/image3.jpg?cropResize=200,200)
-//        * down more ![](item2-1/item2-1-2/image2.jpg?cropResize=200,200)
+        $this->assertSame('<p><img src="/02.item2/02.item2-2/sample-image.jpg" /></p>',
+            $this->parsedown->text('![](sample-image.jpg)'));
+        $this->assertRegexp('|<p><img src="\/images\/.*-cache-image.jpe?g\?foo=1" \/><\/p>|',
+            $this->parsedown->text('![](cache-image.jpg?cropResize=200,200&foo)'));
+        $this->assertRegexp('|<p><img src="\/images\/.*-home-cache-image.jpe?g" \/><\/p>|',
+            $this->parsedown->text('![](/home-cache-image.jpg?cache)'));
+
+
+    }
+
+    public function testImagesSubDir()
+    {
+        $this->uri->initializeWithUrlAndRootPath('http://testing.dev/subdir/item2/item2-2', '/subdir')->init();
+
+        $this->assertSame('<p><img src="/subdir/02.item2/02.item2-2/sample-image.jpg" /></p>',
+            $this->parsedown->text('![](sample-image.jpg)'));
+        $this->assertRegexp('|<p><img src="\/subdir\/images\/.*-cache-image.jpe?g" \/><\/p>|',
+            $this->parsedown->text('![](cache-image.jpg?cache)'));
+//        $this->assertRegexp('|<p><img src="\/subdir\/images\/.*-home-cache-image.jpe?g" \/><\/p>|',
+//            $this->parsedown->text('![](/home-cache-image.jpg?cache)'));
+
+
+    }
+
+
+    public function testImagesAbsoluteUrls()
+    {
+        $this->config->set('system.absolute_urls', true);
+        $this->uri->initializeWithURL('http://testing.dev/item2/item2-2')->init();
+
+//        $this->assertSame('<p><img src="http://testing.dev/images/02.item2/02.item2-2/sample-image.jpg" /></p>',
+//            $this->parsedown->text('![](sample-image.jpg)'));
+        $this->assertRegexp('|<p><img src="http:\/\/testing.dev\/images\/.*-cache-image.jpe?g" \/><\/p>|',
+            $this->parsedown->text('![](cache-image.jpg?cache)'));
+        $this->assertRegexp('|<p><img src="http:\/\/testing.dev\/images\/.*-home-cache-image.jpe?g" \/><\/p>|',
+            $this->parsedown->text('![](/home-cache-image.jpg?cache)'));
+
+
+    }
+
+    public function testImagesSubDirAbsoluteUrls()
+    {
+        $this->config->set('system.absolute_urls', true);
+        $this->uri->initializeWithUrlAndRootPath('http://testing.dev/subdir/item2/item2-2', '/subdir')->init();
+
+//        $this->assertSame('<p><img src="http://testing.dev/subdir/02.item2/02.item2-2/sample-image.jpg" /></p>',
+//            $this->parsedown->text('![](sample-image.jpg)'));
+//        $this->assertRegexp('|<p><img src="http:\/\/testing.dev\/subdir\/images\/.*-sample-image.jpe?g" \/><\/p>|',
+//            $this->parsedown->text('![](sample-image.jpg?cache)'));
+//        $this->assertRegexp('|<p><img src="http:\/\/testing.dev\/subdir\/images\/.*-home-image.jpe?g" \/><\/p>|',
+//            $this->parsedown->text('![](/home-image.jpg?cache)'));
+
 
-        $this->assertSame('<p><a href="http://www.cnn.com">cnn.com</a></p>',
-            $this->parsedown->text('[cnn.com](http://www.cnn.com)'));
-        $this->assertSame('<p><a href="https://www.google.com">google.com</a></p>',
-            $this->parsedown->text('[google.com](https://www.google.com)'));
     }