To shift properly, the automatic transmission has to know how hard the engine is working. There are two different ways that this is done. Some cars have a simple cable linkage connected to a throttle valve in the transmission. The further the gas pedal is pressed, the more pressure is put on the throttle valve. Other cars use a vacuum modulator to apply pressure to the throttle valve. The modulator senses the manifold pressure, which increases when the engine is under a greater load.
The manual valve is what the shift lever hooks up to. Depending on which gear is selected, the manual valve feeds hydraulic circuits that inhibit certain gears. For instance, if the shift lever is in third gear, it feeds a circuit that prevents overdrive from engaging.
Shift valves supply hydraulic pressure to the clutches and bands to engage each gear. The valve body of the transmission contains several shift valves. The shift valve determines when to shift from one gear to the next. For instance, the 1 to 2 shift valve determines when to shift from first to second gear. The shift valve is pressurized with fluid from the governor on one side, and the throttle valve on the other. They are supplied with fluid by the pump, and they route that fluid to one of two circuits to control which gear the car runs in.
The shift valve will delay a shift if the car is accelerating quickly. If the car accelerates gently, the shift will occur at a lower speed. Let's discuss what happens when the car accelerates gently.
As car speed increases, the pressure from the governor builds. This forces the shift valve over until the first gear circuit is closed, and the second gear circuit opens. Since the car is accelerating at light throttle, the throttle valve does not apply much pressure against the shift valve.
When the car accelerates quickly, the throttle valve applies more pressure against the shift valve. This means that the pressure from the governor has to be higher (and therefore the vehicle speed has to be faster) before the shift valve moves over far enough to engage second gear.
Each shift valve responds to a particular pressure range; so when the car is going faster, the 2-to-3 shift valve will take over, because the pressure from the governor is high enough to trigger that valve.