The saddle looks like it should be raised a little to me... Your knee is bent about right, but when pedaling you should be extending your foot as well.
The old rule for saddle height tends to work out about right for me, and it is easy to do.
From the top of the saddle to the pedal (in the down position) should be about 109% of the distance from your pubic bone to the ground when standing straight.
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Slow Ride Cyclists of NEPA
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