Okay, I know what is happening. The front pump in the transmission is likely worn. What happens is this. The torque converter holds a few quarts of transmission fluid. The torque converter connects to the front of the transmission's front pump.
Under normal conditions, the front pump seals off the converter from draining. If it is worn and allows the torque converter to drain off, the fluid is going up after sitting, and then when it is warm and running, the converter is refilled and the fluid is low.
In this case, you should fill it when the engine is warm and running. However, after it sits overnight, the fluid level is going to show over full.
What does all of this mean? The front pump and converter likely need replaced. However, once the front pump is removed, then you have access to the clutch packs in the transmission and should inspect at a minimum the low/reverse clutch pack for wear.
Let me know if this makes sense. Also, let me know if you have other questions.
Take care,
Joe
See pic below. I circled the torque converter and highlighted where the front pump is located.
Image (Click to make bigger)
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Monday, December 12th, 2022 AT 8:52 PM