Literature review is the phase where you read a lot of journal and papers to know what are the hot trends in your research area. Be selective in the journal, for example use, Thomson ISI or Scopus based source to get a reputable source of readings.
In this phase you should be able to analyze the research gap between what has already being done in the current research and you may have some idea what to do based on the future works written at the end of these papers.
Recent paper which dated back one to two years are more favorable to your thesis, as it should the trend continuity in your research area.
