I recently had a similar problem with my new Bush Hog FEL. When I had the bucket raised a ways and wanted to ease it up a little more, it would drop instead of raising /w3tcompact/icons/frown.gif. Applying a little more joystick caused it to raise, but then I would overshoot my mark. The dealer was stumped for quite awhile and the Bush Hog field rep wasn't any help. Then they talked to "an ol' boy who had a lot of experience with hydraulics." After some thought, he said he was sure the problem was in one of the o-ring seals on the shaft of one of the hydraulic lift cylinders -- probably damaged during assembly. When the dealer dismantled the cylinder, sure enough, a section of the seal was missing, Applying just a small amount of joystick allowed fluid to seep by the seal, but increasing the flow caused the cylinder to function almost normally. Before the repair, however, I also noticed that the FEL would not apply enough down pressure to lift the front of the Ford 1700 tractor -- another indication of lack of hydraulic pressure.
You probably have a similar situation -- when you curl the bucket, the cylinder(s) that raise and lower the bucket lose pressure and retract. Good luck figuring out just exactly which one it is /w3tcompact/icons/smile.gif.