hi,

it`s me again (=

well, first of all AT89S52 has feature by which you may disable ALE at each 1/6 of OSC - if bit DISALE in AUXR is set then ALE is active only during MOVX/MOVC commands. I suggest to use this feature.
Now, if you have SV with watchdog so why do not utilize it? It may be done with some ways:
1) the way anybody may suggest is to use one more pin of MCU as source of watchdog timer reset.
2) I would suggest an exotic way: usage of PSEN signal for the same purposes. This way only MOVC from external program memory will reset watchdog timer. Looking on your scheme, I see that you do not use external code memory. So only one thing which may control watchdog, is executing dummy MOVC commands time to time inside your program.
3) the best way I see (and I suggest it to you really) is the usage of pin of upper 74HC373 labeled "Future Use". This way you will be able to control external watchdog and get rid of think "how to use this future-used" pin (=

Regards,
Oleg

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