A -> B
B -> A
And now a few SEO experts came up with the new way of link exchange called 3 way link exchange, so that the search engines dont find out that they are linked back due to a link exchange. So they created the 3 way link exchange, which would add another site C to the Link Wheel.
So the link exchange would look like below.
A -> B
B -> C
C -> A
Here no sites are backlinking to each other. but Search engine algorithms are so advanced that they have a cycle detection system as a part of the pathing algorithm to find out this. So the Best practice is to do link exchange to quality websites and sites within your niche so that its mutual refering of quality content.