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TXB0104: How does Automatic Direction Sensing function work?

Part Number: TXB0104

Tool/software:

VCCA = 1.8 Vdc
VCCB = 5.0 Vdc

the datasheet does not provide details on how the IC decides which direction to transmit the data.

Pin 3, A2 

Good board waveform (on left). 
Bad board waveform (on right)