my onkyo receiver wont recognise the signal from my Apple TV Gen 3, Gen 1 worked just fine. What can I do?

I am having the same exact issue (Onkyo NR509).

I first plugged my ATV2 in when I first got it and it worked great. I then switched to satellite for the night...the next day I tried switching back to the ATV2 and the audio/video feed flickers in and out (signal is out more than in). While the ATV2 is plugged in, my satellite does the same exact thing. Once I unplug the ATV2, satellite is fine.

I've tried setting the tv resolution from auto to 1080p 60 hz. I've tried resetting ATV2 and my onkyo receiver.

Has anyone updated the firmware on there onkyo? could this be it?

Welcome to the Apple community.

I assume you mean the audio signal not the HDMI signal. Have you tried adjusting the Dolby digital setting and the audio out setting in the Apple TV settings under audio and video.

Then you may wish to connect directly to the TV and adjust the TV resolution, reconnect via your sound system and see if that helps. There may be TV resolutions that you're Soundsystem does not support.