To alternate is to swap between, usually two, options.
... a b a b a b a b .... <-- alternating sequence of "a" and "b"
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Interchange? not so obvious.
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These two words are not interchangable.
You generally cannot nterchange them and keep the same meaning.
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The road suddenly became a massive interchange between to major highways. - an intersection that alolows you to change form one road to another road.
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If we take ethylene (C2H4) and interchange the hydrogens for Fluorine we get Tetrafluoroethylene. (C2F4) Swap one for another, once. not continuing.