I thought the same thing. I am not an expert, but I have the mens 2009 Trek 7.5FX sized 17.5 and my seat is a lot higher then what your's appears to be. I'm 5'6 also.
When I am standing off my bike, the top of the seat is just about at the top of my hip.
I would suggest going down to your trusted bike shop and ask them to fit you for riding.





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