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I know its been a while - but I had my light flashing recently - and found out in the recent flush (3 months ago) that they used Dextron as well. Concerned that Dextron could be the culprit based on your finding that mercon should be used. I have a 95 XLT Exploer with 4.0 engine. Any thoughts?
I just wanted to paste here, something I found on this site.. Maybe the Forum monitor could put all related OD threads together it seems its a common problem.
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I had the same exact problem 2 years ago with my 1995 EB Exp. I was out of town in Bettonville Arkansas and the dealer instantly knew it was a failing Throttle Position Sensor (TPS). Yes, the TPS.
The sensor has a bad spot fooling the transmission into thinking you're accelerating. The transmission unlocks the torque converter in anticipation of downshift. The signal comes back from the TPS and the transmission no longer wants to shift and locks the torque converter back up. This is the 100 to 200 rpm swings you see on the tach.
The TPS is super easy to replace and is about $50 for the Ford part. I erge you to start there.
I was having the same problem on my 96 Eddie Bower Explorer, 4.0 automatic.
I had 3 codes come up - p0716, which is a damaged shift solenoid.
Also the code for o2 sensor, and something about cylinder #3 bad, all I did was checked the # 3 spark plug and replaced it. The check engine light went out and it started shifting real good. No more bad shifting from 1st to 2nd.
Try resetting the codes before getting too far into it.
I reset them several times and the same codes return. I am a little nervous about tearing into an auto trans. Never did anything but change fliud and filters before.