Ford Repair: O/D light, ford contour, torque converter

Question
I have a 1996 ford contour 2.0L with 120,000 miles. Recently the O/D light keeps flashing on and off. When it does this it will flash steady with about 1 second intervals. It doesn't do it all the time but is starting to happen more frequently. When it does this it will not shift into overdrive and I cannot use the O/D button. I was thinking that a sensor might have gone bad or that there is a loose connection somewhere but I don't know where to look.  Any help would be appreciated, thanks.

Answer
There are a few possibilitys here,
1. Dirty trans fluid and filter will cause this.
2.modulator would be another problem
3, torque converter bad.
4. servo bands worn..
You have alot of miles on the engine, you should have it inspected by a good transmission mechanic.. Thanks