In this paper a frequency coded chipless RFID localization algorithm is proposed. Unlike other techniques, one reader with multiple antennas is used to interrogate, identify and localize the tag. The Received Signal Strength (RSS) technique is used to detect the range of the tag, while Matrix Pencil Method (MPM) is used to calculate the Angle of Arrival (AoA). To validate both techniques a ray tracing tool was used to calculate the system link budget using tag RCS patterns exported from CST-MWS. The ray-tracing tool also calculated the interrogation zone considering all environmental factors. Moreover, a real-time testbed was created using fabricated chipless tags. The testbed was implemented using both measurement tools and Software Defined Radio (SDR). Both simulation and measurements show a great potential for the chipless tag to be used in localization and tracking application.