Google can definitely recognize 2 and 3 way link exchanges. Many people say that they don't help but I believe that a link is a link and every link helps.
So yes, you should participate in good link exchanges.
Do Link Exchanges Help?
Please share your views.
Yes, they technically count as links, Just be careful what site you are linking too, Most Link Exchange systems do not give you a choice.
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I would for sure do it manually, and not use any software or service for link exchanges. Many of those sites that use a link exchange service bury the link page making your link pretty much useless. Go for real exchanges, that may even give you traffic.
Google gives less priority to link exchanges, I read that somewhere.