Welcome to Healthcare Magic forum.
Tree nuts are frequent causes of allergy in children especially almonds & walnuts .Your suspicion is most likely true as an allergy frequently presents as rash as described.
However please remember that if the rash is worsening or he develops symptoms like breathing difficulty, swelling of tongue,high grade fever, vomiting, decreased urine or bleeding from any site then you should seek prompt consultation with his doctor.Since benadryl and I assume local cortisone has not been effective the doctor might precribe hydroxyzine
or levocetrizine or prednisone
as per his weight and indication.
The less likely possibility is that of a viral exanthem
but its usually preceded by prodrome illness like cold, fever, stomach upset
etc before 3_4 days of rash.Also viral rash
usually subside in a couple of days on its own.
So you may wait and watch for progression and as per feasibility consult your doctor for confirmation of diagnosis and management.
Wishing him a speedy recovery.