int pinA = 6;  // Connected to CLK on KY-040
 int pinB = 8;  // Connected to DT on KY-040
 int encoderPosCount = 0;
 int pinALast;
 int aVal;
 int pinBLast;
 int bVal;
 boolean bCW;

 void setup() {
   pinMode (pinA,INPUT);
   pinMode (pinB,INPUT);
   /* Read Pin A
   Whatever state it's in will reflect the last position
   */
   pinALast = digitalRead(pinA);
   Serial.begin (9600);
 }

 void loop() {
   aVal = digitalRead(pinA);

   if (aVal != pinALast){ // Means the knob is rotating
     // if the knob is rotating, we need to determine direction
     // We do that by reading pin B.
     if (digitalRead(pinB) != aVal) {  // Means pin A Changed first - We're Rotating Clockwise
       encoderPosCount ++;
       bCW = true;
     } else {// Otherwise B changed first and we're moving CCW
       bCW = false;
       encoderPosCount--;
     }
     Serial.print ("Rotated: ");
     if (bCW){
       Serial.println ("clockwise");
     }else{
       Serial.println("counterclockwise");
     }
     Serial.print("Encoder Position: ");
     Serial.println(encoderPosCount);

   }
   pinALast = aVal;
 }