If two websites link to each other this is technically a reciprocal link, however it is important to note that this isn’t necessarily manipulative. It is only manipulative when these links fall under a link exchange, specially undertaken to increase rankings in search engines. Originally created to pass mutual traffic between the two websites, they later became abused like many forms of link spam.
Google Jagger & Penguin
There are still a lot of manipulative reciprocal links pages on the internet, despite these not working since the Jagger2 update by Google back in 2005. Reciprocal links were unlikely to have a negative impact on a website (although still possible), until the Google Penguin algorithm which targets manipulative links was introduced.
Pages were typically added to websites, usually called ‘resource pages’ or ‘partner pages’, which consisted of long lists of other websites designed to pass page rank to the other site.
These were found on commercial websites, often linked to from the footer of the website.
Despite the links to these pages no longer existing they can still often be found as orphaned pages as when the sites were redeveloped people were reluctant to remove the pages, as they were unsure of the effect it might have on their site.
Reciprocal Link Example
This is an example of a reciprocal links page which is in clear breach of the Google guidelines as its sole reason for existing is for passing Page Rank.
Sometimes people reviewing link intent come to the conclusion that a reciprocal link is OK if the anchor text or image doesn’t use commercial anchor/image alt text. This is incorrect as all links which have been built to manipulate should be removed.
There are some exceptional circumstances when a link might be passing traffic and more importantly conversions. It is always a good idea to cross reference the analytics data to ensure that you are not removing links which make you money. In this rare instance, nofollow the link and disavow it accordingly.