727 sometimes not going in reverse

Well you say the needle is jumpy. This usually indicates air. Pinch the line a little at a time to reduce the jumpiness. The needle will stabilize at a more accurate pressure reading.The pump is not a piston pump. The pressure should be steady at a steady input rpm. IIRC the test is to be done at 1600 engine rpm.
I suppose your high-pressure relief valve, or spring, could be bad.BTW, this valve is a ball, but it is a 3/8 ball, while all the others are 5/16.
Buy a qt of ATF then, and add a pint right off, and see what happens. If some improvement add the other half. If problem disappears recalibrate your stick.