We present an Atomic Force Microscopy (AFM) based method to investigate the rheological properties of liquids confined within a nanosize gap formed by an AFM tip apex and a solid substrate. In this method, a conventional AFM cantilever is sheared parallel to a substrate surface by means of a lock-in amplifier while it is approaching and retracting from the substrate in liquid. The normal solvation forces and lateral viscoelastic shear forces experienced by the AFM tip in liquid can be simultaneously measured as a function of the tip-substrate distance with sub-nanometer vertical resolution. A new calibration method is applied to compensate for the linear drift of the piezo transducer and substrate system, leading to a more precise determination of the tip-substrate distance. By monitoring the phase lag between the driving signal and the cantilever response in liquid, the frequency dependent viscoelastic properties of the confined liquid can also be derived. Finally, we discuss the results obtained with this technique from different liquid-solid interfaces. Namely, octamethylcyclotetrasiloxane and water on mica and highly oriented pyrolytic graphite.