1)8052 Timer2 has an UP/DOWN counter mode
in this mode you chose Timer2 as autoreload timer and then set the DCEN bit in T2MOD SFR
in this mode T2EX is up/down input
2)AB encoder is AB phase shifted by 90 degree , so that we can detect direction
3)i multiply encoder pulses such that i detect edges of AB pulses so that i get 4x times resolution
4)i connect UP/down input to VCC becouse i want to see how the times counts only in one direction . Actually i want an up/down counter but i even cant get an 1 direction counter ok.

now to Erik;
i m turning the encoder with my hand only in one direction .
i dont shake it.
when i count the pulses with timer0 i get exactly 1600 -( encoder is 400 pulse )
when i count with timer2 i get meaningless counts