2-3 Shift Valve

During 2nd gear, the shift solenoid valve # 1 is turned ON. This action causes line pressure to one of the passages of the 2-3 shift valve is be exhausted. Spring force moves (and closes) the valve, shutting off line pressure to the direct clutch. Therefore, it releases the direct clutch.

During 3rd gear, the shift solenoid valve # 1 is turned OFF. This directs line pressure to one of the passages of the 2-3 shift valve. The 2-3 shift valve moves (opens) and sends line pressure to the direct clutch, thus applying it.