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The best way is as SLSTech mentioned with the roof inulated all the way to the outside wall.
The problems with this type of construction with the knee walls, lower ceiling in below attic out to outside wall and roof above upstairs space. Is that you have cold air coming in at the soffit and supposedly going out ridge, but sometimes it will infiltrate through the knee wall insulation if it is not tight and sealed and then with the cold air hitting the back of the sheetrock you will have condensation there. And with batts faced or unfaced you do not get a tight seal with 2x4 studs and then if you put in a thicker batt then you have the gap where the studs are not out as far as the insulation. Also don't forget to seal off the space under the floor from the attic, you don't want cold air blowing under there.
I have built several of these type of bungalows, room in attic. What we used to do. Solid blocking under wall in joist space to reduce air inflitration under floor and blocking out from top of knee wall to hold ceiling insulatiion and to give a place to attach foam board. Knee wall gets 3.5" batts and cover wall in attic space with 1.5 or 2 " foam board running it up in to rafter space fitted around rafters leaving a 1" gap for ventilation and all the way down to sheetrock of ceiling below fitting it in between the ceiling/floor joists. And then some canned foam to fill in any gaps and tape seams. And then blown in for the ceiling below attic space. This will reduce any chance of air infiltration on that wall.
What we do now, spray foam either closed roof or under ventilation space built under roof. And then this conditioned attic space is sheetrocked and used as storage if stick built or just left as is if trusses. And way better overall if there is any ductwork in there.
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