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I am sorry to hear about this concern.
The itching part of it is what is suspicious.
It almost sounds like a hypersensitivity reaction or allergy. So, I wouldn't be against you giving some antihistamine to see if helpful.
Benadryl can be given at a dose of 1mg per pound of body weight. Keep in mind, Benadryl tablets and liquids come in different sizes. So, an approximately 25 pound dog can get a full 25mg tablet or a half of a 50mg tablet. I usually avoid the liquid Benadryl in larger dogs (you would have to give too much of it). You can give Benadryl every 8-12 hours.
I would continue the essential fatty acid supplement.
Lastly, scabies (the contagious type of mange) can be very difficult to get on skin scrapings. So, a skin scraping, absolutely, needs to be repeated.
You also might want to consider getting a dermatologist involved.
You could even refer yourself to one by using this link to find one near you.
http://www.acvd.org/ & then select "find dermatologist"
Tiny bald spots.
!!!!Someone better repeat that skin scraping. Scabies may be a little less likely, but demodex is now much higher on the list.
You are at the mercy of the person doing the skin scraping doing it correctly!!!
Skin scraping: http://www.petplace.com/dogs/skin-scraping/page1.aspx
Would it be demodex if the skin is smooth without any redness, flakyness or irritation?
I will definetly get another skin scraping and let you know what they find.
If it is demodex, how would you treat it?
Probably oral ivermectin. Start on lower dose to ensure well tolerated and wean up to correct dose. Probably have to give for several weeks.
It's the most common treatment.