A two pulse encoder is a position measurement sensor that has two channels, A and B. When the encoder is moved, either signal A or signal B on the encoder pulses. A pulse on signal A represents a movement in one direction, and a pulse on signal B represents movement in the opposite direction. When signal A pulses, the counter increments. When signal B pulses, the counter decrements.
Many encoders also use z indexing for precise determination of a reference position.