Shrinathji is not an incarnation (avatara) of Krishna, he's just Krishna himself. The Srinathji idol depicts Krishna as a child holding the Govardhana hill, which is why his hand is raised as you can see in the image below. Krishna didn't incarnate as some other individual to lift the hill, he lifted it himself. So it makes no sense to call Shrinathji an incarnation of Krishna.
Now as to your question about whether there can be incarnation of an incarnation, the answer is yes, as long as we understand what we mean by that. "X is an incarnation of Y" means that X is a body whose soul is Y. So Rama is an incarnation of Vishnu, for instance, because the soul that was occupying Rama's body was Vishnu. Now if Rama were in turn to create an incarnation, what soul would it have? Vishnu would be the soul, of course. So an incarnation of an incarnation of a god is at a fundamental level just an incarnation of that same god. To put it another way, to say that someone is an incarnation of an incarnation is a statement about how that person came to be created, not a statement about what they are.
Keeping that in mind, here are some examples of people who were an "incarnation of an incarnation" of some god:
As I discuss in this answer, Krishna's elder brother Balarama is an incarnation of Vishnu's serpent Adiseshan (AKA Ananta), but he is still an incarnation of Vishnu, even included in the Dasavathara often, because Adiseshan is himself an incarnation of Vishnu.
As I discuss in this answer, the Shiva Purana describes a (possibly spurious) story where Vishnu's incarnation Narasimha is subdued by a half-lion half-bird creature Sharabha, an incarnation of Virabhadra, who is himself a demon incarnation that Shiva took to kill Daksha after Shakti's death.
As I discuss in this answer, there is also a story about how after Narasimha was subdued by Shiva's incarnation Sharabha, Sharabha was himself defeated by Ghandaberunda, a two-headed bird beast incarnation of Narasimha, who let's remember is himself an incarnation of Vishnu. Whew!
By the way, in a comment to one of my answers, a user suggested two other potential examples, Vitthoba and Venkateshwara, who he claimed were incarnations of Krishna, but I don't think it's true in either case. I would call Venkateshwara (AKA Srinivasa or Balaji) either Vishnu himself or a simple incarnation of Vishnu. After all, he does call Rama and Krishna past births of his, which suggests that he's either a reincarnation of them, in which case he would be a simple incarnation of Vishnu, or that they're incarnations of his, which would mean that he's Vishnu himself. And I think Vitthoba (AKA Vitthala or Panduranga) is just Krishna, not an incarnation of Krishna, based on the stories presented on the Wikipedia page.