Thank you so much for the advice! The rash got extremely dry and some of the skin even started peeling, but when I started moisturizing/putting cortisone cream on it, it started to heal. I am wondering if the extreme dryness provides any more clues as to what it was exactly? Eczema maybe? I've never had eczema before though which makes me doubt this theory.
It is possible that this is an allergic reaction. This red itchy bump can also appear in insect bite. It may not be always possible to detect the allergen. Take an antihistamine like hydroxyzine for relief in itching. Apply calamine lotion. If there is no relief see a dermatologist. A clinical examination may be neccesary.In severe cases of urticaria topical and oral steroids may be prescribed. Do keep us posted.
Best luck and regards!