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Yes, it could be a strain or a sprain. If that is the case, keep him strictly rested and quiet for a few days and see if it resolves.
In small dogs like this, it is quite common for there to be issues in the knee. The most common of these is a condition called medially luxating patella. It is a situation where the knee cap pops out of place to the inside. When this happens, it results in a knee that is fixed in position and generally manifests in a dog as a few hopping steps or holding the leg up. It is easily diagnosed by palpation by an experienced veterinarian. It is a progressive issue that often affects both knees. Eventually it can result in permanent fixation of the knees and crippling arthritis.
It can be fixed surgically by an experienced surgeon. I would have this evaluated to rule out MLP's and discuss treatment options.
Hope this is helpful.
Not all the dogs read the books and know exactly how they ought to behave. Some dogs do not show the typical manifestations. Others, even with significant luxation, show no signs at all until later in the course of the problem.
Also, this is a progressive disorder, so it is possible that the signs you are seeing are the first ones. Even though the problem is present as a young dog, it often is not clinical until the dog is a bit older - like your dog.
Certainly it may not be MLP. But that is the first thing I would rule out. It is graded on a 1-4/4 basis. The repairs are more successful in grade 1-2 rather than waiting till it is a grade 3-4.
Other things to consider would be tick-borne diseases (usually have fever and significant illness with joint pain), cervical disk disease (also usually painful on movement of the neck), strain/sprain, foot injuries or foreign bodies, other knee injuries (like anterior cruciate rupture), etc. But all those things can be evaluated by your vet.
Hope these thoughts are helpful.