Arzette: The Jewel of Faramore

"At the start of Durridin Forest, continue heading east until you've made it inside the tree, then climb out of the top of it. On this floor, you would see the blue blocks that would ordinarily lead inside the alcove where you can find the Sword Wave. Instead, keep heading west until you're inside the trunk of a tree, then duckwalk inside of the hidden passage. Now grab onto the ladder and jump to the right where the branch with the Hidden Coin is, then duckwalk through the hidden opening to stand on it. From there, jump off the edge of the branch to the right to find yourself ontop of a treeline (which you may have mistaken as being part of the background, as I had), keep heading east until you've arrived at a section of wood jutting into the alcove with the Sword Wave, which is right past the blue blocks. Jump on the branches until you've arrived inside of the alcove, and your Sword Wave will be within reach."
-Taken from GooberTV on GameFAQs

The smart gun is the item you get at the end of Creece Canyon for trading Fairy dust, just avoid taking the zip line and you will be fine