#define CLK_PIN  2
#define DATA_PIN 3
static uint16_t state=0;
static uint8_t counter=0;

void setup() {
   pinMode(CLK_PIN,INPUT);
   pinMode(DATA_PIN,INPUT);
   Serial.begin(9600);
   Serial.println("Rotary Encoder KY-040");
}

void loop() {
    delayMicroseconds(100);
    state=(state<<1) | digitalRead(CLK_PIN) | 0xe000;
    if (state==0xf000){
        state=0x0000;
        if(digitalRead(DATA_PIN))
            counter++;
        else
            counter--;
        Serial.println(counter);
    }    
}